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 3: Multilateralism and FTAs: A Chinese Perspective on an Australia–China FTA

Dashu Wang

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


Dashu Wang INTRODUCTION The World Trade Organization (WTO) reports that as of the end of 2005, there existed 300 regional trading agreements between WTO members, up from 130 at the end of 1994. There have been many excellent surveys of regional economic integration in Asia (e.g. Kawai 2005, Naya 2002, Asian Development Bank 2002). Nevertheless, it is much harder to find a good synthesis of the broader literature, in part because the literature is evolving so rapidly in response to the radical developments the world has seen in the past years. The main issues involved in the multilateralization of free trade agreements (FTAs) turn on rules of origin, rules of cumulation and the economic spillovers on third nations. These are immensely complex and involve a very subtle economic and legal logic (Baldwin 2006). A related point was underscored analytically in Wonnecott and Wonnecott (1981) in terms of tariff liberalization. Bilateral liberalization is an attempt to achieve deeper integration with their trading partners on a formal basis, going beyond reductions in border restrictions. Early advocates of a purely non-discriminatory approach to tariff liberalization maintained that such a strategy was always superior to a regional approach. Lloyd (2002) argues that bilateralism/ FTA will likely lead toward, not impede, multilateralism, while Brown et al. (2003) believe in the superiority of multilateralism. Baldwin (2006) suggests that, while rules of origin for FTAs in some sensitive sectors are political landmines, it would seem possible to develop global standards for preferential rules of origin in less...

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