Customs Unions and Third Countries: the Tariff Quota Solution

  • Michael Rom
Part of the Trade Policy Research Centre book series


When customs unions are created third countries suffer from trade-diverting effects. The justification under the GATT for permitting this customs-union and free-trade-area exception from the MFN clause, embodied in Article XXIV appears to warrant further discussion.


Free Trade Supply Curve Custom Union Contracting Parti Commercial Policy 
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Notes and References

  1. 2.
    See Basic Instruments and Selected Documents 6th Supplement (Geneva: GATT, 1958), pp. 68–109.Google Scholar
  2. Also Robert Zinser, ‘Das GATT und die Meistbegünstigung’, Handbuch für Europäische Wirtschaft, Volume 24 ( Baden-Baden and Bonn: Verlag Lutzeyer, 1962 ) pp. 65–7.Google Scholar
  3. 5.
    G. Jaenicke, ‘Das Allgemeine Zoll — und Handelsabkommen: Rechtsgrundlagen und Rechtsprobleme’, Archiv des Völkerrechts, Tübingen, Volume 7, 1958–59, p. 413.Google Scholar
  4. 11.
    Jacob Viner, ‘The Most Favoured Nation Clause’ in International Economics ( Glencoe, Illinois: Free Press, 1951 ) p. 102.Google Scholar
  5. 14.
    Richard G. Lipsey, The Theory of Customs Unions: a General Survey’, Economic Journal, September 1960, pp. 496–7.Google Scholar
  6. 15.
    Viner, The Customs Union Issue, Carnegie Endowment for International Peace (New York and London: Stevens, 1950 ) pp. 47–8.Google Scholar
  7. 16.
    Haberler, The Theory of International Trade (New York: Macmillan, 1950) pp. 384 and 390. It is true that he refers primarily to preferential duties, but as he himself indicates the case should also be extended to customs unions.Google Scholar
  8. 19.
    James E. Meade, The Theory of Customs Unions ( Amsterdam: North Holland, 1955 ) p. 34.Google Scholar
  9. 27.
    See Tibor Scitovsky, Economic Theory and Western European Integration rev. ed. (London: Allen & Unwin, 1962) p. 53. His method of computation is based on estimating the total gain and loss in the case of each product, and not step by step as suggested by Meade.Google Scholar
  10. 32.
    See Paul Erdman and Peter Rogge, Die Europäische Wirtschaftsgemeinschaft and die Drittländer (Basle: 1960) pp. 28–42.Google Scholar
  11. 40.
    See M. W. Reder, Studies in Theory of Welfare Economics (New York: Columbia University Press, 1947) pp. 14–15. The definition adopted has had considerable currency in theoretical literature on the subject and has become almost ‘the’ standard definition: ’welfare increases whenever one or more individuals become more satisfied without any other becoming less satisfied.’ (It has been assumed here that a net addition of some commodities obtained by one individual, over and above what he had before, is more satisfying to him.)Google Scholar

Copyright information

© Michael Rom and the Trade Policy Research Centre 1979

Authors and Affiliations

  • Michael Rom

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