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Under Article XIV of the GATT, regional trade agreements are permitted provided that countries within the arrangement do not change their tariffs against outside members.
Under Article XIV of the GATT, regional trade agreements are permitted provided that countries within the arrangement do not change their tariffs against outside members. Because the tariffs on nonmember countries are unchanged while those levied on partners in the pact are removed or reduced, the formation of free-trade areas and customs unions leads to an overall increase in the gains from international trade. Comment?
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