In this paper it is argued that there is an important protectionist bias inherent in free trade agreements which is not present in custom unions. In any customs union or free trade agreement, one of the critical issues concerns "rules of origin." In a free trade agreement rules of origin have an...

Conventional analysis in the trade-industrial-organization literature suggests that, when a country has some market power over an imported good, some small level of protection must be welfare improving. This is essentially a terms-of-trade argument that is reinforced if the imported goods are...

In this paper it is argued that there is an important protectionist bias inherent in free trade agreements which is not present in custom unions. In any customs union or free trade agreement, one of the critical issues concerns "rules of origin." In a free trade agreement rules of origin have an...