Is the Wto's Article Xxiv a Free Trade Barrier?

CSGR Working Paper No. 49/00

46 Pages Posted: 22 Jun 2000

See all articles by Ben Zissimos

Ben Zissimos

Vanderbilt University - College of Arts and Science - Department of Economics

David Vines

University of Oxford - Balliol College - Department of Economics; Australian National University (ANU); Centre for Economic Policy Research (CEPR)

Date Written: February 2000

Abstract

Why is further multilateral trade liberalisation proving so difficult to achieve? This paper shows that Article XXIV itself, the set of WTO rules governing trade block formation, undermines the multilateral liberalisation process. Trade block formation under Article XXIV can be thought of as a coalition formation game with negative externalities. We suppose that the usual mechanism through which block formation exerts a negative externality on non-members - a rise in external tariffs - is precluded by Article XXIV. But essentially the same effect is created by internal tariff reduction. From this it follows that free trade is not an equilibrium.

Keywords: free trade, protection, trade liberalisation.

JEL Classification: F02, F13, F15

Suggested Citation

Zissimos, Ben and Vines, David, Is the Wto's Article Xxiv a Free Trade Barrier? (February 2000). CSGR Working Paper No. 49/00, Available at SSRN: https://ssrn.com/abstract=229823 or http://dx.doi.org/10.2139/ssrn.229823

Ben Zissimos (Contact Author)

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States

HOME PAGE: http://www.vanderbilt.edu/econ/cv/ZissimosCV.pdf

David Vines

University of Oxford - Balliol College - Department of Economics ( email )

Manor Road
Oxford, OX1 3BJ, Oxfordshire OX13UQ
United Kingdom
+44 1865 271 067 (Phone)
+44 1865 271 094 (Fax)

Australian National University (ANU)

Canberra, Australian Capital Territory
Australia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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