scholarly journals Essays on the interaction between multilateral tariff bindings and the formation of preferential trade agreements

2021 ◽  
Author(s):  
Nken Moise
Keyword(s):  
Free Trade ◽  
Comparative Advantage ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Free Riding ◽  
Preferential Trade Agreements ◽  
Customs Union ◽  
Preferential Trade ◽  
High Tariff ◽  
The Impact

This dissertation studies the effect of continual reduction in the tariff bindings and its implications on the static and dynamic formation of preferential trade agreements (PTAs). Underlying trade model is a three country \competing exporters" model. First, utilizing a static game of endogenous trade agreement formation between three countries, we examine the effects of continual reduction in tariff bindings on the role of PTA formation in attaining global free trade. We show that, in the free trade agreement (FTA) formation game, when countries are completely symmetric, free trade always obtains as the coalition-proof Nash equilibrium (CPNE) of the FTA game. Under the customs union (CU) game, CU members exercise an exclusion incentive and free trade fails to be a CPNE. When countries are asymmetric with respect to their comparative advantage, the country with a weaker comparative advantage has an incentive to free ride on trade liberalization of the two others and continual reduction in tariff bindings facilitates FTA formation in attaining global free trade. Next, we employ a three country dynamic model of PTA formation where countries form PTAs over time and investigate the impact of multilateral tariff binding liberalization on the equilibrium extent of FTA and CU formation in isolation. When forming FTAs under relatively high tariff bindings, a myopic free riding incentive of FTA non-members constrains FTA formation. Thus, tariff binding liberalization can facilitate FTA expansion to global free trade. However, when forward looking countries do not value this myopic free riding incentive, tariff binding liberalization can impede FTA expansion to global free trade. In our CU game, CU formation proceeds to global free trade only for relatively high tariff bindings. Finally, we examine the PTA game where countries endogenously choose between CU and FTA formation. Under such a game, we show that the equilibrium emergence of CUs can prevent global free trade that would otherwise occur through FTAs. In contrast, the equilibrium emergence of FTAs can facilitate global free trade that would otherwise not occur through CUs.

scholarly journals Essays on the interaction between multilateral tariff bindings and the formation of preferential trade agreements

2021 ◽  
Author(s):  
Nken Moise
Keyword(s):  
Free Trade ◽  
Comparative Advantage ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Free Riding ◽  
Preferential Trade Agreements ◽  
Customs Union ◽  
Preferential Trade ◽  
High Tariff ◽  
The Impact

This dissertation studies the effect of continual reduction in the tariff bindings and its implications on the static and dynamic formation of preferential trade agreements (PTAs). Underlying trade model is a three country \competing exporters" model. First, utilizing a static game of endogenous trade agreement formation between three countries, we examine the effects of continual reduction in tariff bindings on the role of PTA formation in attaining global free trade. We show that, in the free trade agreement (FTA) formation game, when countries are completely symmetric, free trade always obtains as the coalition-proof Nash equilibrium (CPNE) of the FTA game. Under the customs union (CU) game, CU members exercise an exclusion incentive and free trade fails to be a CPNE. When countries are asymmetric with respect to their comparative advantage, the country with a weaker comparative advantage has an incentive to free ride on trade liberalization of the two others and continual reduction in tariff bindings facilitates FTA formation in attaining global free trade. Next, we employ a three country dynamic model of PTA formation where countries form PTAs over time and investigate the impact of multilateral tariff binding liberalization on the equilibrium extent of FTA and CU formation in isolation. When forming FTAs under relatively high tariff bindings, a myopic free riding incentive of FTA non-members constrains FTA formation. Thus, tariff binding liberalization can facilitate FTA expansion to global free trade. However, when forward looking countries do not value this myopic free riding incentive, tariff binding liberalization can impede FTA expansion to global free trade. In our CU game, CU formation proceeds to global free trade only for relatively high tariff bindings. Finally, we examine the PTA game where countries endogenously choose between CU and FTA formation. Under such a game, we show that the equilibrium emergence of CUs can prevent global free trade that would otherwise occur through FTAs. In contrast, the equilibrium emergence of FTAs can facilitate global free trade that would otherwise not occur through CUs.

scholarly journals The Impact of NAFTA on Australia’s Trade and the Implications of Preferential Trade

2016 ◽  
Vol 2 (1) ◽  
pp. 78-84
Author(s):  
Jarrad Marthaller
Keyword(s):  
United States ◽  
Free Trade ◽  
Trade Agreement ◽  
Trade Agreements ◽  
The United States ◽  
Preferential Trade Agreements ◽  
Preferential Trade ◽  
Trade Relations ◽  
Strong Relation ◽  
The Impact

This article will be exploring and evaluating trade relations between Australia and The United States of America, with a particular focus on the effects of NAFTA (North American Free Trade agreement) on the amount of trade between these two countries. I used trade data available over a narrow span of several decades in order to create several tables that document the change in volume of trade between Australia and The United States in an attempt to demonstrate that NAFTA and Preferential Trade Agreements in general run contrary to the principles of free trade that the World Trade organization espouses. By showing a strong relation between a downturn in the demand for Australian exports and the timing of the NAFTA’s signing, I show that Preferential Trade Agreements such as NAFTA and more recently, the Trans-Pacific Partnership may be leading to protectionist regional blocs.

The Law and Political Economy of International Trade Agreements

2019 ◽  
Author(s):  
Michael Trebilcock
Keyword(s):  
Developing Countries ◽  
International Trade ◽  
Free Trade ◽  
Comparative Advantage ◽  
Trade Agreements ◽  
Developed Countries ◽  
Preferential Trade Agreements ◽  
Preferential Trade ◽  
Multilateral Trade ◽  
Wide Range

While economists overwhelmingly favor free trade, even unilateral free trade, because of the gains realizable from specialization and the exploitation of comparative advantage, in fact international trading relations are structured by a complex body of multilateral and preferential trade agreements. The article outlines the case for multilateral trade agreements and the non-discrimination principle that they embody, in the form of both the Most Favored Nation principle and the National Treatment principle, where non-discrimination has been widely advocated as supporting both geopolitical goals (reducing economic factionalism) and economic goals (ensuring the full play of theories of comparative advantage undistorted by discriminatory trade treatment). Despite the virtues of multilateral trade agreements, preferential trade agreements (PTAs), authorized from the outset under GATT, have proliferated in recent years, even though they are inherently discriminatory between members and non-members, provoking vigorous debates as to whether (a) PTAs are trade-creating or trade-diverting; (b) whether they increase transaction costs in international trade; and (c) whether they undermine the future course of multilateral trade liberalization. A further and similarly contentious derogation from the principle of non-discrimination under the multilateral system is Special and Differential Treatment for developing countries, where since the mid-1950s developing countries have been given much greater latitude than developed countries to engage in trade protectionism on the import side in order to promote infant industries, and since the mid-1960s on the export side have benefited from non-reciprocal trade concessions by developed countries on products of actual or potential export interest to developing countries. Beyond debates over the strengths and weaknesses of multilateral trade agreements and the two major derogations therefrom, further debates surround the appropriate scope of trade agreements, and in particular the expansion of their scope in recent decades to address divergences or incompatibilities across a wide range of domestic regulatory and related policies that arguably create frictions in cross-border trade and investment and hence constitute an impediment to it. The article goes on to consider contemporary fair trade versus free trade debates, including concerns over trade deficits, currency manipulation, export subsidies, misappropriation of intellectual property rights, and lax labor or environmental standards. The article concludes with a consideration of the case for a larger scope for plurilateral trade agreements internationally, and for a larger scope for active labor market policies domestically to mitigate transition costs from trade.

scholarly journals Znacaj porekla proizvoda u evropskim sporazumima o trgovini

2003 ◽  
Vol 44 (157) ◽  
pp. 61-83
Author(s):  
Radovan Kovacevic
Keyword(s):  
Free Trade ◽  
Market Access ◽  
Trade Agreements ◽  
Preferential Trade Agreements ◽  
Rules Of Origin ◽  
Preferential Trade ◽  
The Balkans ◽  
Policy Objectives ◽  
The Impact ◽  
The Eu

The key element of the EU's free trade and preferential trade agreements is the extent to which they deliver improved market access and thus contribute to the EU's foreign policy objectives towards developing countries and neighbouring countries in Europe, including the countries of the Balkans. The previous preferential trade schemes have been ineffective in delivering improved access to the EU market. The main reason for this is probably very restrictive rules of origin that the EU imposes, coupled with the costs of proving consistency with these rules. If the EU wants the 'Everything but Arms' agreement and free trade agreements with countries in the Balkans to generate substantial improvements in access to the EU market for products from these countries, then it will have to reconsider the current rules of origin and implement less restrictive rules backed upon by a careful safeguards policy. Governments apply rules to distinguish between foreign and domestic products and to define the foreign origin of a product where some imports receive preferential treatment. The purpose of this paper is to focus on the issue of the rules of origin, and on the "cummulation" of such rules within the EU preferential trade agreements. It does this, firstly, through detailing rules of origin, secondly, by providing a conceptual discussion of the impact of (the cummulation of) rules of origin, and thirdly, by exploring characteristics of preferential trade agreements.

scholarly journals The Impact of Indonesia-Bangladesh Railway Cooperation on the Establishment of Bilateral Preferential Trade Agreements

WIMAYA ◽  
2020 ◽  
Vol 1 (02) ◽  
pp. 10-18
Author(s):  
Darley Alfian Pratama ◽  
Rizki Rahmadini Nurika
Keyword(s):  
Economic Integration ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Domestic Demand ◽  
Preferential Trade Agreements ◽  
Literature Study ◽  
Preferential Trade Agreement ◽  
Preferential Trade ◽  
Mutual Dependence ◽  
The Impact

This research discusses the railway cooperation between Indonesia and Bangladesh which is motivated by the interest of Bangladesh to revitalize railways and increase the domestic demand for railways. This research aims to find out why the Indonesia-Bangladesh cooperation in the railway sector has a significant impact on the formation of the Indonesia Bangladesh Preferential Trade Agreement (IB-PTA) in 2018. This research using interview and literature study methods. The theory used in this research is the theory of interdependence and economic integration. The conclusion of this research is that the Indonesia-Bangladesh railroad cooperation has a significant impact, causing a sense of mutual dependence. The two countries finally agreed to form economic integration in the form of PTA in order to improve the economies of each country.

Endogenous Preferential Trade Agreements: An Empirical Analysis

2003 ◽  
Vol 2 (1) ◽  
Author(s):  
Christopher S Magee
Keyword(s):  
Political Economy ◽  
Empirical Analysis ◽  
Bilateral Trade ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Preferential Trade Agreements ◽  
The Political ◽  
Preferential Trade ◽  
Trading Partners ◽  
Regional Agreements

Abstract This paper provides one of the first assessments of the hypothesis that two countries are more likely to form a preferential trade agreement (PTA) if they are already major trading partners. The paper also tests a number of predictions from the political economy literature about which countries are expected to form regional agreements. The results show that countries are more likely to be preferential trading partners if they have significant bilateral trade, are similar in size, and are both democracies. Finally, the paper measures the effect of preferential agreements on trade volumes while, unlike previous studies, treating PTA formation as endogenous.

Preferential Trade Agreements of the Eurasian Economic Union

2020 ◽  
pp. 29-55
Author(s):  
Maria Lagutina
Keyword(s):  
Free Trade ◽  
Trade Agreements ◽  
Preferential Trade Agreements ◽  
Economic Feasibility ◽  
Free Trade Zone ◽  
Partner Country ◽  
Preferential Trade ◽  
Trade Relations ◽  
Eurasian Economic Union ◽  
Economic Union

One of the trends in the development of modern trade relations is the increase in the number of concluded preferential trade agreements (PTA), which are considered to be a tool for reducing tariffs and, as a consequence, reducing the costs of entering the domestic market of the partner country. Although the Eurasian Economic Union (EAEU) has made only the first steps on the way towards its development. The EAEU has already managed to create a free trade zone with Vietnam, some agreements have been signed with Iran and China. Each of these agreements has its own specifics. The purpose of this chapter is to identify the economic feasibility and political significance of these preferential trade agreements for the countries of the EAEU and their external partners, as well as to determine the potential expansion of the network of preferential trade agreements of the EAEU.

scholarly journals The Two Noble Kinsmen: Internal and Legal Transparency in the WTO and Their Connection to Preferential and Regional Trade Agreements

2016 ◽  
Vol 5 (2) ◽  
pp. 539-569
Author(s):  
Maria Panezi
Keyword(s):  
Decision Making ◽  
Dispute Settlement ◽  
Trade Agreement ◽  
Trade Agreements ◽  
Regional Trade Agreements ◽  
Regional Trade ◽  
Preferential Trade ◽  
Institutional Processes ◽  
Multilateral Trading System ◽  
The Impact

Abstract The proliferation of Preferential Trade Agreements (PTAs) and Regional Trade Agreements (RTAs) has given rise to significant debate on the need to measure, understand and possibly regulate the impact these agreements have on the multilateral trading system under the umbrella of the World Trade Organization (WTO). This article will discuss the two Doha Transparency Mechanisms (legal transparency) regarding regional trade agreements, as they appear in two General Council decisions from 2006 and 2010. I will argue based on a closer look and a consistent interpretation of Paragraph 10 of the Doha Ministerial Declaration that there is another type of transparency that is relevant to the discussion on PTAs/RTAs, namely “internal transparency.” “Internal transparency stricto sensu” highlights the significance of trust in the WTO institutional processes, such as negotiations, decision-making, dispute settlement and trade monitoring that the representatives of developing member states should have in order for the WTO system to function productively. “Internal transparency lato sensu” is introduced in this article as an extension to include any decision-making deficits, exclusionary and asymmetrical outcomes specifically in the area of unchecked Preferential Trade Agreement proliferation. Instead of a conclusion, the article offers some proposals for more a meaningful progress in the WTO with respect to PTAs/RTAs The proposals aim at raising the profile of both legal and internal of transparency and posit that raising the profile of one will inevitably lead in improvements in the other.

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