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
tariff
A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
s but not by abolishing them completely. It is the first stage of
economic integration
Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff and Non-tariff barriers to trade, non-tariff restrictions on trade.
The trade-stimulation effects intended by ...
.
These tariff preferences have created numerous departures from the
normal trade relations principle, namely that
World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...
(WTO) members should apply the same tariff to imports from other WTO members.
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
The Transatlantic Trade and Investment Partnership (TTIP) was a proposed trade agreement between the European Union (EU) and the United States, with the aim of promoting trade and multilateral economic growth. According to Karel De Gucht, Euro ...
(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. PTAs have seen rapid growth; in the 1990s, there were slightly more than 100 PTAs. By 2014, there were more than 700.
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
GDP
Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performance o ...
, similarity of economic size, and distance between countries correctly predict over 80% of PTAs in effect as of 2020.
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.
List of preferential trade areas
A
free trade area
A free trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and ...
is basically a preferential trade area with increased depth and scope of tariffs reduction. All
free trade area
A free trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and ...
s,
customs union
A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.GATTArticle 24 s. 8 (a)
Customs unions are established through trade pacts where the participant countries set u ...
s,
common markets,
economic union
An economic union is a type of trade bloc which is composed of a common market with a customs union. The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of prod ...
s,
customs and monetary unions and
economic and monetary unions are considered advanced forms of a PTA, but these are not listed below.
Multilateral
*
Economic Cooperation Organization
The Economic Cooperation Organization or ECO is a Eurasian political and economic intergovernmental organization that was founded in 1985 in Tehran by the leaders of Iran, Pakistan, and Turkey. It provides a platform to discuss ways to improve ...
(ECO) (1992)
*
Generalized System of Preferences
The Generalized System of Preferences, or GSP, is a preferential tariff system which provides tariff reduction on various products. The concept of GSP is very different from the concept of " most favored nation" (MFN). MFN status provides equal tr ...
*
Global System of Trade Preferences among Developing Countries
The Global System of Trade Preferences among Developing Countries (G.S.T.P) is a preferential trade agreement, currently encompassing 42 members ("participants"), signed on 13 April 1988 with the aim of increasing trade between developing count ...
(GSTP) (1989)
*
Latin American Integration Association
The Latin American Integration Association / Asociación Latinoamericana de Integración / Associação Latino-Americana de Integração (LAIA / ALADI) is an international and regional scope organization. It was created on 12 August 1980 by t ...
(LAIA/ALADI) (1981)
*
Melanesian Spearhead Group (MSG) (1994)
*
Protocol on Trade Negotiations (PTN) (1973)
*
South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1981)
Bilateral
Several hundred bilateral PTAs have been signed since the early 20th century. The TREND project of the
Canada Research Chair in International Political Economy lists around 700 trade agreements, the vast majority of which are bilateral.
*
European Union
The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
–
ACP countries, formerly via the trade aspects of the
Cotonou Agreement
The Cotonou Agreement (French: ''Accord de Cotonou'') is a treaty between the European Union (EU) and the African, Caribbean and Pacific Group of States ("ACP countries"). It was signed in June 2000 in Cotonou, Benin's largest city, by 78 ACP c ...
, later via
Everything But Arms (EBA) agreements
*
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
–
Afghanistan
Afghanistan, officially the Islamic Emirate of Afghanistan, is a landlocked country located at the crossroads of Central Asia and South Asia. It is bordered by Pakistan to the Durand Line, east and south, Iran to the Afghanistan–Iran borde ...
(2003)
*
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
–
Mauritius
Mauritius, officially the Republic of Mauritius, is an island country in the Indian Ocean, about off the southeastern coast of East Africa, east of Madagascar. It includes the main island (also called Mauritius), as well as Rodrigues, Ag ...
*
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
–
Nepal
Nepal, officially the Federal Democratic Republic of Nepal, is a landlocked country in South Asia. It is mainly situated in the Himalayas, but also includes parts of the Indo-Gangetic Plain. It borders the Tibet Autonomous Region of China Ch ...
(2009)
*
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
–
Chile
Chile, officially the Republic of Chile, is a country in western South America. It is the southernmost country in the world and the closest to Antarctica, stretching along a narrow strip of land between the Andes, Andes Mountains and the Paci ...
(2007)
*
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
–
MERCOSUR
The Southern Common Market (commonly known by abbreviation ''Mercosur'' in Spanish and ''Mercosul'' in Portuguese) is a South American trade bloc established by the Treaty of Asunción in 1991 and Protocol of Ouro Preto in 1994. Its full me ...
(2009)
*
ASEAN
The Association of Southeast Asian Nations,
commonly abbreviated as ASEAN, is a regional grouping of 10 states in Southeast Asia "that aims to promote economic and security cooperation among its ten members." Together, its member states r ...
–
PR China
China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
(2005)
*
Laos
Laos, officially the Lao People's Democratic Republic (LPDR), is the only landlocked country in Southeast Asia. It is bordered by Myanmar and China to the northwest, Vietnam to the east, Cambodia to the southeast, and Thailand to the west and ...
–
Thailand
Thailand, officially the Kingdom of Thailand and historically known as Siam (the official name until 1939), is a country in Southeast Asia on the Mainland Southeast Asia, Indochinese Peninsula. With a population of almost 66 million, it spa ...
(1991)
*
Bangladesh
Bangladesh, officially the People's Republic of Bangladesh, is a country in South Asia. It is the List of countries and dependencies by population, eighth-most populous country in the world and among the List of countries and dependencies by ...
-
Bhutan
Bhutan, officially the Kingdom of Bhutan, is a landlocked country in South Asia, in the Eastern Himalayas between China to the north and northwest and India to the south and southeast. With a population of over 727,145 and a territory of , ...
(2020)
See also
*
Bilateral investment treaty (BIT)
*
Trade and Investment Framework Agreement
A Trade and Investment Framework Agreement (TIFA) is a trade pact that establishes a framework for expanding trade and resolving outstanding disputes between countries.
TIFAs are often seen as an important step towards establishing Free Trade ...
(TIFA).
References
External links
The Concept Design of a Twenty-First Century Preferential Trade AgreementWTO PTA list
{{Use dmy dates, date=April 2020
Economic integration
vi:Hội nhập kinh tế#Thỏa thuận thương mại ưu đãi