Negotiating a Preferential Trading Agreement

Negotiating a Preferential Trading Agreement

Issues, Constraints and Practical Options

Edited by Sisira Jayasuria, Donald MacLaren and Gary Magee

Presenting a blend of economics and law, this book provides unique insights as well as practical guidance for negotiators considering major issues on the agendas of bilateral and regional preferential trading agreements (PTAs).

Chapter 2: Review of International Experience: Ex Post Studies of Other PTAs and Implications for PTA Design

Russell Hillberry

Subjects: asian studies, asian urban and regional studies, business and management, international business, economics and finance, international business, international economics


Russell Hillberry 1 The last decade has seen remarkable growth in the number of preferential trade agreements (PTAs). One hundred and seven goods agreements and 34 preferential services agreements have been notified to the WTO since the implementation of the Uruguay Round in 1995. Figure 2.1 illustrates the recent nature of this phenomenon.2 There are a number of explanations for the rapid growth in the number of PTAs. First, growth in the number of WTO members, and in the scope of their economic interests, has made it more difficult to identify mutually agreeable multilateral commitments. As a result, multilateral negotiations have slowed down, and trade ministries have shifted their attention toward PTAs. Second, the international goods trade is becoming more complex, requiring policy makers to address a more comprehensive set of issues than they once did. Third, governments are increasingly using PTAs to pursue non-economic objectives. The United States, for example, appears to have embraced PTAs as a foreign policy tool. Finally, the shift by large countries toward PTAs has had a destabilizing effect on the multilateral process. The subsequent proliferation of PTAs follows, in part, from the absence of credible large country support for the multilateral process. Both the growth in the number of PTAs and the expansion of their policy scope have complicated economists’ efforts to inform trade policy. When policy makers negotiated occasional, multilateral agreements that focused primarily on tariff reductions, economists could fully endorse the agreements, and support them with plausible quantitative estimates of their likely...

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