Customs Unions: A Tool for Peace

Free Trade Agreements versus Customs Unions:

Overlapping bilateral free trade agreements (FTAs) are proliferating in East Asia. Quite a few economists worry about the spaghetti bowl phenomenon expected from the proliferating East Asian regional trade agreements (RTAs).The complicated web of hub-and-spoke type of FTAs can result in high costs for verifying rules of origin (RoO). As an alternative policy option to avoid the negative effect ...

Free Trade, Customs Unions, and Transfers

All countries would agree to immediate global free trade if countries were compensated for any terms-of-trade losses with transfers from countries whose terms-of-trade improve, and if customs unions were required to have no effects on non-member countries. Global free trade with transfers is in the core of a Kemp-WanGrinols customs union game. (52 words)

Trade-diverting Customs Unions and Welfare Improvement: a Clarification

Optimal Currency Areas and Customs Unions: Are They Connected?

This paper examines the link between currency unions and customs unions. The size of a bloc of countries practising some form of co-ordination of monetary policy is limited by the incentive to free-ride that formation of the bloc creates. However, when the threat of a trade war is introduced, the stable size of the bloc increases. This suggests that a) large currency areas are more likely to em...

An Elementary Proposition concerning the Formation of Customs Unions

Froposition. Ccnsiaer any competitive world trading ewilibrium, with any number of countries and commodities, and with no restrictions whatever on the tariffs and other commodity taxes of individual countries, and with costs of transport fully recognized. Now let any subset of the countries form a customs unton. Then there exists a common tartrvector and a system of lump-sum compensatory paymen...