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The adjustment of external tariffs in the Kemp‐Wan‐Grinols compensation scheme

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  • Siu‐kee Wong

Abstract

. This paper considers the adjustment of external tariffs when two countries integrate and implement the Kemp‐Wan‐Grinols compensation scheme. Attention is also paid to the restrictions set by Article XXIV of GATT. This paper shows how the external tariffs would change in a three‐good, three‐country model under the assumption of gross substitutability. The results are sensitive to the initial trade pattern. In particular, they depend on the number of goods initially traded between the member countries. The analysis can be extended to a multi‐commodity model if the preferences of the countries have identical CES representation. JEL classification: F11, F15 L’ajustement des tarifs douaniers avec le monde extérieur dans le schème de compensation à la Kemp‐Wan‐Grinols. Ce mémoire examine l’ajustement des tarifs avec le monde extérieur quand deux pays forment un tout économique intégré et mettent en place un schème de compensation à la Kemp‐Wan‐Grinols. On prend en compte les restrictions imposées par l’article XIV du GATT. On indique comment les tarifs avec le monde extérieur changeraient dans un modèle à trois pays et trois biens quand on postule un degré général de substituabilité. Les résultats dépendent du pattern initial de commerce : en particulier, ils dépendent du nombre de biens initialement échangés entre les pays membres. L’analyse peut être généralisée à un modèle à plusieurs biens si les préférences des pays ont une représentation CES identique.

Suggested Citation

  • Siu‐kee Wong, 2006. "The adjustment of external tariffs in the Kemp‐Wan‐Grinols compensation scheme," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(2), pages 544-563, May.
    • Handle: RePEc:wly:canjec:v:39:y:2006:i:2:p:544-563
    DOI: 10.1111/j.0008-4085.2006.00359.x
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    References listed on IDEAS

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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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