Template-Type: ReDIF-Paper 1.0
Author-Name: Kamal Saggi
Author-X-Name-First: Kamal
Author-X-Name-Last: Saggi
Author-Email: kamal.saggi@vanderbilt.edu 
Author-Workplace-Name: Department of Economics, Vanderbilt University, Nashville, TN
Author-Name: Woan Foong Wong
Author-X-Name-First: Woan
Author-X-Name-Last: Wong
Author-Email: wfwong@uoregon.edu
Author-Workplace-Name: Department of Economics, University of Oregon, Eugene, Oregon
Author-Name: Halis Murat Yildiz
Author-X-Name-First: Halis
Author-X-Name-Last: Yildiz
Author-Email: hyildiz@ryerson.ca
Author-Workplace-Name:  Department of Economics, Ryerson University, Toronto, Canada
Author-Name: 
Author-X-Name-First:    
Author-X-Name-Last: 
Author-Email: 
Author-Workplace-Name:  
Title: Preferential Trade Agreements and Rules of the Multilateral Trading System
Abstract: In a three-country model of endogenous trade agreements, we study the effects of major WTO rules governing the conduct of free trade agreements (FTAs). We show that FTA members retain positive internal tariffs even if they seek to maximize their joint welfare. Requiring FTAs to eliminate internal tariffs — as stipulated by current WTO rules — makes the non-member better o§ although it simultaneously reduces the likelihood of achieving global free trade by encouraging free-riding on its part. While the WTO’s non-discrimination constraint is not necessarily conducive to reaching global free trade, it raises welfare in a tariff-ridden world.
Keywords: Free Trade Agreements, Tariffs, Customs Unions, World Trade Organization, Coalition proof Nash equilibrium, Welfare
Length: 46 pages
Creation-Date: 2017-12
Number: 067
File-URL: http://economics.ryerson.ca/workingpapers/wp067.pdf
File-Format: Application/pdf
Handle: RePEc:rye:wpaper:wp067