Chapter 6 Normative Comparisons of Customs Unions and Other Types of Free Trade Association

Abstract

Purpose – The chapter examines whether the well-known Kemp–Wan proposition about customs unions is valid for free trade associations (FTAs).

Methodology/approach – The chapter employs the assumption of perfect competition but with considerable generality.

Findings – It is shown that the Kemp–Wan proposition is valid for any form of FTA. It is also shown that sense can be made of the common conjecture that a customs union is more beneficial to the world economy than a comparable but distinct FTA.

Originality/value – The findings are of significance in view of the recent tendency of governments to prefer FTAs to customs unions.

Citation

Kemp, M.C. (2008), "Chapter 6 Normative Comparisons of Customs Unions and Other Types of Free Trade Association", Tran-Nam, B., Van Long, N. and Tawada, M. (Ed.) Globalization and Emerging Issues in Trade Theory and Policy (Frontiers of Economics and Globalization, Vol. 5), Emerald Group Publishing Limited, Leeds, pp. 77-86. https://doi.org/10.1016/S1574-8715(08)05006-9