Is the Wto's Article Xxiv a Free Trade Barrier?
CSGR Working Paper No. 49/00
46 Pages Posted: 22 Jun 2000
Date Written: February 2000
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: Suggested Citation
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