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 Transatlantic Trade and Investment Partnership (TTIP) or Trans Pacific Partnership (TPP)), a global trade system exclusively managed within the framework of the WTO now seems unrealistic and the interactions between trade systems have to be taken into account. The increased complexity of the international trade system generated by the multiplication of PTAs should be taken into account in the study of the choice of fora used by countries or regions to promote their trade relations and environmental agenda.[2] PTAs have seen rapid growth; in the 1990s, there were slightly more than 100 PTAs. By 2014, there were more than 700.[3]
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 GDP, similarity of economic size, and distance between countries correctly predict over 80% of PTAs in effect as of 2020.[3]
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 areasedit
Stages of economic integration around the World (each country colored according to the most integrated multilateral agreement that it participates in):
^CRS Report for Congress: Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition - Order Code 97-905 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.
^ abcBaccini, Leonardo (2019). "The Economics and Politics of Preferential Trade Agreements". Annual Review of Political Science. 22: 75–92. doi:10.1146/annurev-polisci-050317-070708.
^"Signing of Preferential Trade Agreement with Bangladesh". Retrieved 7 February 2022.
External linksedit
WTO PTA list
World Bank PTA database
April 08, 2024
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Preferential trade agreement redirects here For the usage of the term by the World Trade Organization see Trade pact By the World Trade Organization 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 Transatlantic Trade and Investment Partnership TTIP or Trans Pacific Partnership TPP a global trade system exclusively managed within the framework of the WTO now seems unrealistic and the interactions between trade systems have to be taken into account The increased complexity of the international trade system generated by the multiplication of PTAs should be taken into account in the study of the choice of fora used by countries or regions to promote their trade relations and environmental agenda 2 PTAs have seen rapid growth in the 1990s there were slightly more than 100 PTAs By 2014 there were more than 700 3 Contents 1 Predictors 2 List of preferential trade areas 2 1 Multilateral 2 2 Bilateral 3 See also 4 References 5 External linksPredictors editIn 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 GDP similarity of economic size and distance between countries correctly predict over 80 of PTAs in effect as of 2020 3 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 edit nbsp Stages of economic integration around the World each country colored according to the most integrated multilateral agreement that it participates in Economic and monetary union ECCU XCD Eurozone EUR Switzerland Liechtenstein CHF Economic union CSME EAEU EU GCC Mercosur SICA Common market EEA Switzerland Customs and monetary union CEMAC XAF UEMOA XOF Customs union CAN EAC EUCU SACU Multilateral free trade area AANZFTA ASEAN CEFTA CISFTA COMESA CPTPP EFTA GAFTA PAFTA RCEP SADCFTA SAFTA USMCA vteA free trade area is basically a preferential trade area with increased depth and scope of tariffs reduction All free trade areas customs unions common markets economic unions customs and monetary unions and economic and monetary unions are considered advanced forms of a PTA but these are not listed below Multilateral edit 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 edit Several hundred bilateral PTAs have been signed since the early 20th century The TREND project 6 of the Canada Research Chair in International Political Economy lists around 700 trade agreements the vast majority of which are bilateral 7 European Union ACP countries formerly via the trade aspects of the Cotonou Agreement later via Everything But Arms EBA agreements India Afghanistan 2003 India Mauritius India Nepal 2009 India Chile 2007 India MERCOSUR 2009 ASEAN PR China 2005 Laos Thailand 1991 Bangladesh Bhutan 2020 8 See also editBilateral investment treaty BIT Trade and Investment Framework Agreement TIFA References edit 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 Frederic Morin Tereza Novotna Frederik Ponjaert and Mario Telo The Politics of Transatlantic Trade Negotiations TTIP in a Globalized World Routledge 2015 p 127 a b c Baccini Leonardo 2019 The Economics and Politics of Preferential Trade Agreements Annual Review of Political Science 22 75 92 doi 10 1146 annurev polisci 050317 070708 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 economie politique internationale EPI www chaire epi ulaval ca Acces TRade amp ENvironment Database Access TRade amp ENvironment Database Signing of Preferential Trade Agreement with Bangladesh Retrieved 7 February 2022 External links editWTO PTA list World Bank PTA database Retrieved from https en wikipedia org w index php title Preferential trading area amp oldid 1070408973, wikipedia, wiki, book, books, library,
