Economic Integration, Non-tariff Barriers and Social Welfare

Economic Integration, Non-tariff Barriers and Social Welfare

This paper analyses the extent to which preferential trade agreements can lead to the substitution of non-tariff barriers for tariffs, and the effects of non-tariff barriers on welfare and other parameters. Its main results are that non-tariff barriers reduce aggregate welfare, and that the governments of economically integrated countries replace tariffs by non-tariff barriers if and only if their priority is protection of their nations` firms.