Chapter 9 - Discrimination trade policies: Free trade areas and anti-dumping protection. After completing this chapter, students will be able to: Show that there are contradictory clauses in the GATT, the most glaring of which are the exceptions to the most favored nation clause; explain how trade creation and trade diversion make the welfare effects of a trade bloc theoretically ambiguous; familiarize the student with several recent regional integration schemes, including the EU and NAFTA;. | With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation., any advantage, favour, privilege or immunity granted to any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties. (Article I of the GATT, 1947) The Goals of This Chapter Show that there are contradictory clauses in the GATT, the most glaring of which are the exceptions to the most favored nation clause. Explain how trade creation and trade diversion make the welfare effects of a trade bloc theoretically ambiguous. Familiarize the student with several recent regional integration schemes, including the EU and NAFTA. Discuss whether regional economic integration is a step on the way to full multilateral free trade or whether it creates permanent discriminatory regional economic groups. Explain that GATT/WTO rules on antidumping procedures are often abused in order to protect special interests against specific foreign competitors. Defining Regional Economic Integration Under a preferential trade area (PTA) member countries agree to lower trade barriers within the group to levels below those erected against outside economies. A free trade area (FTA) eliminates all trade restrictions between members of the trade bloc, but each member maintains its own restrictions on trade with third countries. A customs union (CU) is a trade bloc whose members agree on common tariffs against nonmember countries. A common market (CM) allows for the free trade of goods among members sets common tariffs against outside countries, and permits the free movement of factors of production among members. An economic union (EU) has all the characteristics of a CM plus members agree to a uniform set of macroeconomic and microeconomic policies. Figure Levels of Regional Economic Integration Trade . | With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation., any advantage, favour, privilege or immunity granted to any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties. (Article I of the GATT, 1947) The Goals of This Chapter Show that there are contradictory clauses in the GATT, the most glaring of which are the exceptions to the most favored nation clause. Explain how trade creation and trade diversion make the welfare effects of a trade bloc theoretically ambiguous. Familiarize the student with several recent regional integration schemes, including the EU and NAFTA. Discuss whether regional economic integration is a step on the way to full multilateral free trade or whether it creates permanent discriminatory regional economic groups. Explain
