Economics, Econometrics and Finance
4 years ago

Customs Unions Outperform Free Trade Agreements in Boosting Welfare and Reducing Protectionism

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Journal of Development Economics
Free trade agreements versus customs unions
Anne O. Krueger

Paper Summary

The article compares free trade agreements (FTAs) and customs unions (CUs) like NAFTA. It shows that CUs with a common external tariff are better for welfare than FTAs. CUs are always better than FTAs on welfare grounds. Also, FTAs may lead to more opposition to further trade liberalization than CUs.

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