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Toward a North American Customs Union Rules of Origin Liberalization Matters More than a Common External Tariff for Canada

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  • Patrick Georges

    (Graduate School of Public and International Affairs, University of Ottawa)

Abstract

This paper shows that when moving from the North American Free Trade Agreement (NAFTA) to a Customs Union (CU), the general equilibrium impacts on Canadian GDP and welfare, of removing Rules of Origin (ROO), are potentially larger than the small effects resulting from the adoption of a common external tariff (CET). Therefore, proposals for a CU should not be dismissed solely on the basis that the establishment of a CET would marginally affect Canada while the negotiation process with the U.S. would be long and difficult -- rules of origin liberalization matters more than a common external tariff for Canada.

Suggested Citation

  • Patrick Georges, 2007. "Toward a North American Customs Union Rules of Origin Liberalization Matters More than a Common External Tariff for Canada," Working Papers 0704E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:0704e
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    References listed on IDEAS

    as
    1. José Anson & Olivier Cadot & Antoni Estevadeordal & Jaime de Melo & Akiko Suwa‐Eisenmann & Bolormaa Tumurchudur, 2005. "Rules of Origin in North–South Preferential Trading Arrangements with an Application to NAFTA," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 501-517, August.
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    7. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.
    8. Kala Krishna & Anne Krueger, 1995. "Implementing Free Trade Areas: Rules of Origin and Hidden Protection," NBER Working Papers 4983, National Bureau of Economic Research, Inc.
    9. Ghosh, Madanmohan & Rao, Someshwar, 2005. "A Canada-U.S. customs union: Potential economic impacts in NAFTA countries," Journal of Policy Modeling, Elsevier, vol. 27(7), pages 805-827, October.
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    Cited by:

    1. Georges, Patrick & Mérette, Marcel, 2011. "Trade Diversification Away from the U.S. or North American Customs Union? A Review of Canada’s Trade Policy Options," Conference papers 332084, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    NAFTA; Customs Union; Rules of Origin; Common External Tariff; Computable General Equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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