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 12: Ensuring Compliance between a Bilateral PTA and the WTO

Andrew D. Mitchell and Nicolas J.S. Lockhart

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


Andrew D. Mitchell and Nicolas J.S. Lockhart INTRODUCTION The global trading system is now comprised of an interlocking, evergrowing, network of bilateral, regional and multilateral trade agreements. It would be easy to assume that any form and combination of trade agreement is necessarily beneficial for trade. After all, such agreements pursue the common goal of trade promotion through liberalization. More trade agreements of whatever type might, therefore, translate into more trade liberalization. The short-coming of this assumption is, however, that multilateral and other agreements pursue this goal in different and often conflicting ways. A core objective of the multilateral trading system is ‘the elimination of discriminatory treatment in international trade relations’.1 In pursuit of this objective, World Trade Organization (WTO) Members must accord equal treatment to the goods and services of all other WTO Members (through ‘most-favoured-nation’ or MFN treatment).2 In contrast, preferential trade agreements (PTAs), such as free trade agreements (FTAs) and customs unions, pursue trade liberalization through precisely this type of discrimination. The parties to a PTA liberalize trade solely among themselves, creating a network of special preferences within the PTA that are not available to other WTO Members. PTAs, therefore, entrench the very discrimination that WTO rules seek to eliminate. This key difference in approach makes the relationship between multilateralism and regionalism both complicated and controversial. In this book, other contributions examine whether in economic terms maintaining an evergrowing network of PTAs alongside multilateral rules produces an overall increase or decrease in economic welfare. In legal...

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