Preferential Trading Arrangements

What are preferential trading arrangements? The GATT/WTO articles call for nondiscrimination among trading partners. But as mentioned earlier, Article 24 provides for an exception. Countries may enter into a preferential trading arrangement (PTA) under conditions described later. Many PTAs are now in force around...

NAFTA and USMCA

How are NAFTA and USMCA different? The North American Free Trade Agreement (NAFTA) came into force at the beginning of 1994. It was an “FTA plus” between Canada, Mexico, and the US. There had been some strenuous opposition to the preferential trading arrangement (PTA)...

THE EFFECT OF MULTILATERALISM, REGIONALISM, AND OPEN REGIONALISM TOWARDS EXPORTS: ASEAN-5 STUDY CASE

Conceptually elimination or reduction of trade barriers through a Regional Trading Arrangement would increase export and import in the region. Trade diversion would take effect and make member countries buy each other goods and services that become cheaper. Open regionalism is another regionalism concept in which the parties involved promise to extend lower tariffs concession not only to member countries but also to other trading parters. This will hinder member countries to reap the benefit of trade diversion. This study examines the effect of Regionalism (afterAFTA was fully effective) and Open Regionalism (after Open Regionalism was fully effective for more developed APEC members) on ASEAN-5 countries’ export. Using ARIMAX model, the results show that regionalism has a significant yet negative effect on Malaysia and The Philippines and a positive significant effect on Singapore, whereas it is not significant for Indonesia and Thailand’s exports. Open regionalism is shown to be not significant for Indonesia, Thailand, and The Philippines exports but it has a negative significant impact for Singapore and Malaysia’s exports.

The African Growth and Opportunity Act and the African Continental Free Trade Area

This essay assesses and evaluates the extent to which the African Growth and Opportunity Act (AGOA) increased imports from AGOA eligible countries to the United States from 2001 to 2015. The essay then examines how African countries can make the most of the preferences granted under AGOA, arguing that AGOA national utilization strategies have proven successful. In the final part, the essay explores options for future U.S.-Africa trade relations after the AGOA expires in 2025, proposing approaches that would best support African development. In this regard, this essay argues that, since Congress is unlikely to renew AGOA in its current form and since AGOA will likely be replaced with an arrangement requiring some degree of reciprocity, it will be very important for (1) the African Union's Continental Free Trade Area (CFTA) to be implemented before any new U.S.-Africa trading arrangement comes into force and (2) for negotiations for any future U.S.-Africa trading arrangement not to mimic the negotiations conducted for the Economic Partnership Agreements with the European Union.

Regime Type, Veto Players, and PTA Formation

This chapter tests the theoretical propositions about domestic politics developed in chapter 2. Using a new dataset, it aims to identify the domestic and international factors that affect a country's decision to join and ratify a preferential trading arrangement (PTA). It reviews whys democratic regimes are especially likely to enter PTAs and why a large number of veto players reduce the odds that a country will join such arrangements. Then, it tests these arguments after accounting for the effects of various other economic and international variables, including those that were of greatest importance in the systemic analysis conducted in chapter 3. The results provide strong support for these claims. Both regime type and veto players significantly influence whether and when states conclude trade agreements.

Conclusions

This chapter summarizes the key findings and discusses the implications of the results for the study of international relations and international trade. It argues that that the decision to enter a preferential trading arrangement (PTA) owes much to domestic politics. Although there are other sources of trade agreements, the domestic political factors uncovered in this study have been vastly neglected. Moreover, the linkages between domestic politics and international institutions, like PTAs, have been underappreciated. Political leaders are highly attuned to their domestic political situation; they take few actions without considering the consequences for domestic politics and their longevity in office. Combining an understanding of their domestic political calculations and their foreign policy behavior may better illuminate the sources of their actions.