Chapter 6 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.