Common External Tariff Choice in Core Customs Unions

• Published in: Review of international economics Vol. 17; no. 2; pp. 292 - 303
• Main Authors: Melatos, Mark, Woodland, Alan
• Format: Journal Article
• Language: English
• Published: Oxford, UK Blackwell Publishing Ltd 01-05-2009; Wiley Blackwell
• Series: Review of International Economics
• Subjects: Customs unions; Economic bloc; Economic models; Economic statistics; Economic theory; General economic equilibrium; International trade; Studies; Tariffs; Trade policy
• ISSN: 0965-7576; 1467-9396
• DOI: 10.1111/j.1467-9396.2009.00824.x

This paper investigates how customs union members select the common external tariff (CET) to levy on imports from nonmembers. A perfectly competitive, pure exchange, general‐equilibrium model of world trade is simulated. Contrary to most previous work, countries have the freedom to share authority over CET choice and to select from a variety of possible coalition forms. The results confirm that when customs unions are observed in the core, members may wish to share responsibility for CET choice in a variety of ways. Generally, however, the member country that is relatively well‐endowed or has relatively elastic consumer preferences tends to take the lead in CET choice.