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Competitive Liberalization or Competitive Diversion? The Relationship between Preferential Trade Agreements and the Multilateral Trading System

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  • Soamiely Andriamananjara

    (USITC)

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    Abstract

    This article discusses whether the current proliferation of preferential trade agreements-the so-called "competitive liberalization"-encourages evolution toward multilateral free trade. It argues that countries pursuing preferential trade initiatives are in pursuit of the economic rents resulting from the trade diversion associated with trade preference (or discrimination). By lowering the margin of preference, multilateral trade liberalization reduces those rents and is likely to be resisted by members of trade-diverting preferential blocs. Future preferential agreements should be designed to be less trade diverting in order to be more compatible with the objective of global free trade.

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    File URL: http://128.118.178.162/eps/it/papers/0305/0305002.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series International Trade with number 0305002.

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    Length: 14 pages
    Date of creation: 09 May 2003
    Date of revision:
    Handle: RePEc:wpa:wuwpit:0305002

    Note: Type of Document - Word - PDF; prepared on IBM PC ; to print on HP/PostScript/Franciscan monk; pages: 14 ; figures: included
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    Web page: http://128.118.178.162

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    Keywords: competitive liberalization Regionalism Multilateralism;

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    1. Anne O. Krueger, 1999. "Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 105-124, Fall.
    2. Pravin Krishna, 1998. "Regionalism And Multilateralism: A Political Economy Approach," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 227-250, February.
    3. C. Fred Bergsten, 1996. "Competitive Liberalization and Global Free Trade: A Vision for the Early 21st Century," Working Paper Series WP96-15, Peterson Institute for International Economics.
    4. Andriamananjara, Soamiely, 2000. "Regionalism and Incentives for Multilateralism," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 1-18.
    5. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers 857, C.E.P.R. Discussion Papers.
    6. repec:fth:coluec:9596-04 is not listed on IDEAS
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