12_3150_pta - Preferential Trade Areas Preferential Trade...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Preferential Trade Areas Econ 3150 York U 1 Preferential Trade Areas How to reduce the use of the welfare-worsening policies? 1. Country can cut tariffs unilaterally (i.e. by itself, no matter what partners do) 2. Most often multilateral agreements are used, when a country lowers its tariffs as its partners do. Preferential trade agreements agreements among a smaller set of countries, usually with some geographic proximity. (Example: NAFTA – Mexico, Canada, US.) A) Free trade area – the least restrictive preferential trade arrangement all trade barriers are eliminated among members, while members maintain their own tariffs against outside countries. B) Custom union – stronger, eliminates all trade barriers among participation nations but imposes a common tariff against nonmember countries.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Preferential Trade Areas Econ 3150 York U 2 C) Common market trade barriers are removed and barriers against factor movement are also removed (FDI, labour migration). Welfare improvement under PTE is not guaranteed. Recall,
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/09/2010 for the course ECON 3150 taught by Professor Allalileeva during the Winter '09 term at York University.

Page1 / 5

12_3150_pta - Preferential Trade Areas Preferential Trade...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online