Regional integration and lobbying for tariffs against nonmembers

We study the impact of regional trading arrangements (RIAs) on tariff polic y toward nonmembers in a three-good, three-country political economy model. Comparing free-trade areas (FTAs) with and without rules of origin and cus toms unions (CUs) with varying degrees of economic and political integratio n, we show how increasingly deep integration can lead to rising protection against nonmember imports. Other differences between FTAs and CUs, like the extent of free-riding in a CU and any component of a CU's tariff designed to improve the members' terms of trade, are not explicitly accounted for. N evertheless, the results suggest that FTAs are likely to welfare dominate C Us.