Should the WTO require free trade agreements to eliminate internal tariffs?

• 成果类型: Article
• 署名作者: Saggi, Kamal; Wong, Woan Foong; Yildiz, Halis Murat
• 署名单位: Vanderbilt University; University of Oregon; Toronto Metropolitan University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2018.10.003
• 发表日期: 2019
• 页码: 316-330
• 关键词: Free trade agreements; TARIFFS; Customs unions; World trade organization; Coalition proof Nash equilibrium; welfare

摘要

In a three-country model of endogenous free trade agreements (FTAs), we study the effects of requiring ETA members to eliminate tariffs on one another, as is essentially stipulated under current WTO rules. We explain why, in the absence of such a requirement, FTAs members impose positive tariffs on each other even when maximizing their joint welfare. We show that requiring ETA members to eliminate internal tariffs induces them to lower their external tariffs. Such external trade liberalization by FTA members undermines the prospects of global free trade since it reduces the non-member's incentive to enter into trade agreements with them. (C) 2018 Published by Elsevier B.V.