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TAFTA: fuelling trade discrimination or global liberalisation?

Author

Listed:
  • Siebert, Horst
  • Langhammer, Rolf J.
  • Piazolo, Daniel

Abstract

This paper analyses the prospects and problems of a Transatlantic Free Trade Area (TAFTA) between the European Union and the United States. Possible economic reasons for the proposal of TAFFA such as the intensity of bilateral trade and a strong interdependence in investment flows and the similarity of the EU and the US in their factor endowment and tariff structure are examined. There are cases shining favourably on the idea, but the implementation of TAFTA will imply substantial costs due to the internal and external consequences. The main problem of a free trade area between the two most important economic blocs is the impact on the multilateral approach of trade liberalisation. The authors suggest a Transatlantic Liberalisation Initiative (TALI) as an alternative to TAFTA. Under TALI, the EU and the US should accelerate their implementation of their Uruguay Round commitments and liberalise in areas that are not yet covered by WTO agreements. This should be done under the Most-Favoured Nation clause and would be a strong motivating force for multilateral liberalisation. In addition, TALI could be a forerunner in reducing market segmentation and in establishing a semiinternal market between Europe and America.

Suggested Citation

  • Siebert, Horst & Langhammer, Rolf J. & Piazolo, Daniel, 1996. "TAFTA: fuelling trade discrimination or global liberalisation?," Kiel Working Papers 720, Kiel Institute for the World Economy.
    • Handle: RePEc:zbw:ifwkwp:720
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    References listed on IDEAS

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    1. Krueger, Anne O., 1997. "Free trade agreements versus customs unions," Journal of Development Economics, Elsevier, vol. 54(1), pages 169-187, October.
    2. Rolf J. Langhammer, 1992. "The Developing Countries and Regionalism," Journal of Common Market Studies, Wiley Blackwell, vol. 30(2), pages 211-232, June.
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    Cited by:

    1. Siebert, Horst, 2005. "TAFTA - a dead horse or an attractive open club?," Kiel Working Papers 1240, Kiel Institute for the World Economy.
    2. Jana Kovářová, 2014. "The Theory of the Free Trade Area As a Possible Form of Future Cooperation of the European Union with The US [Teorie pásma volného obchodu jako možné formy budoucí spolupráce Evropské unie s USA]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2014(1), pages 56-71.
    3. Siebert, Horst, 1997. "An institutional order for a globalizing world economy," Kiel Working Papers 807, Kiel Institute for the World Economy.
    4. Georg Koopmann, 1998. "North Atlantic trade and investment links: For internal and external openness," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 33(3), pages 118-125, May.
    5. Hufbauer, Gary Clyde, 2013. "Multilateralism and regionalism from an American perspective: Parallels and contrasts with the Langhammer vision," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-18.
    6. Siebert, Horst, 1998. "What does globalization mean for the world trading system?," Kiel Working Papers 856, Kiel Institute for the World Economy.
    7. Rolf J. Langhammer & Daniel Piazolo & Horst Siebert, 2002. "Assessing Proposals for a Transatlantic Free Trade Area," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 57(02), pages 161-186, June.

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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