Preferential trading area
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A preferential trade area (also preferential trade agreement, PTA) is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely. It is the first stage of economic integration.
These tariff preferences have created numerous departures from the normal trade relations principle, namely that World Trade Organization (WTO) members should apply the same tariff to imports from other WTO members.[1]
With the recent multiplication of bilateral PTAs and the emergence of Mega-PTAs (wide regional trade agreements such as the
Predictors
In 2004, Scott Baier and Jeffrey Bergstrand published that there were three economic determinants critical to the formation of PTAs. Countries are more likely to participate in PTAs if they have low transportation costs and larger economies. Third, countries with similar economic sizes are likely to benefit the most by forming PTAs. Economic determinants like
The remaining PTAs can be attributed to political predictors. Countries under democratic rule are more likely to participate in PTAs than those under autocratic rule. Autocratic rulers are not elected, and thus do not have their power threatened by dissatisfied citizens. Democratic leaders are incentivized to keep their constituents satisfied, and PTAs can help lower the price of consumer goods. Advocating for PTAs also lets democratic leaders signal to voters that they are committed to policies that improve their welfare. Countries are also more likely to join PTAs if competitor countries have already done so.[3]
List of preferential trade areas
A
are considered advanced forms of a PTA, but these are not listed below.Multilateral
- Economic Cooperation Organization (ECO) (1992)
- Generalized System of Preferences
- Global System of Trade Preferences among Developing Countries (GSTP) (1989)
- Latin American Integration Association (LAIA/ALADI) (1981)[4]
- Melanesian Spearhead Group (MSG) (1994)
- Protocol on Trade Negotiations (PTN) (1973)
- South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1981)[5]
Bilateral
Several hundred bilateral PTAs have been signed since the early 20th century. The TREND project
- Everything But Arms(EBA) agreements
- India – Afghanistan (2003)
- India – Mauritius
- India – Nepal (2009)
- India – Chile (2007)
- MERCOSUR(2009)
- PR China(2005)
- Laos – Thailand (1991)
- Bangladesh - Bhutan (2020)[8]
See also
References
- ^ CRS Report for Congress: Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition - Order Code 97-905 Archived 10 August 2011 at the Wayback Machine
- ^ Jean-Frédéric Morin, Tereza Novotná, Frederik Ponjaert and Mario Telò, The Politics of Transatlantic Trade Negotiations, TTIP in a Globalized World, Routledge, 2015, p. 127.
- ^ .
- ^ From 18 March 1981 LI5342
- ^ From 1 January 1981 WT/COMTD/N/29 Archived 27 March 2009 at the Wayback Machine
- ^ "Ongoing projects - Chaire de recherche du Canada en économie politique internationale (EPI)". www.chaire-epi.ulaval.ca.
- ^ "Acces; TRade & ENvironment Database". Access TRade & ENvironment Database.
- ^ "Signing of Preferential Trade Agreement with Bangladesh". Retrieved 7 February 2022.
External links