Normative Comparisons of Customs Unions and Other Types of Free Trade Association

Purpose - The chapter examines whether the well-known Kemp-Wan proposition about customs unions is valid for free trade associations (FTAs). Methodology/approach - The chapter employs the assumption of perfect competition but with considerable generality. Findings - It is shown that the Kemp Wan proposition is valid for any form of FTA. It is also shown that sense can be made of the common conjecture that a customs union is more beneficial to the world economy than a comparable but distinct FTA. Originality/value - The findings are of significance in view of the recent tendency of governments to prefer FTAs to customs unions.