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Preferential Trade Agreements and the World Trade System: A Multilateralist View

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  • Pravin Krishna

Abstract

This paper reviews recent developments in international trade to evaluate several arguments concerning the merits of preferential trade agreements (PTAs) and their place in the world trade system. Taking a multilateralist perspective, it makes several points: First, despite the proliferation of PTAs in recent years, the actual amount of liberalization that has been achieved through PTAs is actually quite limited. Second, at least a few studies point to significant trade diversion in the context of particular PTAs and thus serve as a cautionary note against casual dismissals of trade diversion as a merely theoretical concern. Equally, adverse effects on the terms-of-trade of non-member countries have also been found in the literature. Third, while the literature has found mixed results on the question of whether tariff preferences help or hurt multilateral liberalization, the picture is different with the more elastic tools of trade policy, such as antidumping duties (ADs); the use of ADs against non-members appears to have dramatically increased while the use of ADs against partner countries within PTAs has fallen. Fourth, despite the rapid expansion of preferences in trade, intra-PTA trade shares are relatively small for most PTAs; multilateral remain relevant to most member countries of the WTO.

Suggested Citation

  • Pravin Krishna, 2012. "Preferential Trade Agreements and the World Trade System: A Multilateralist View," NBER Working Papers 17840, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17840
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    1. Pravin Krishna, 1998. "Regionalism and Multilateralism: A Political Economy Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 227-251.
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    Cited by:

    1. Monika Jain, 2021. "Was India Right in Not Joining RCEP? A Cost–Benefit Analysis," India Quarterly: A Journal of International Affairs, , vol. 77(4), pages 542-559, December.
    2. Jayjit Roy, 2014. "On the robustness of the trade-inducing effects of trade agreements and currency unions," Empirical Economics, Springer, vol. 47(1), pages 253-304, August.
    3. Jean-Christophe Bureau & Houssein Guimbard & Sébastien Jean, 2019. "Competing liberalizations: tariffs and trade in the twenty-first century," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 707-753, November.
    4. Bureau, Christophe & Guimbard, Houssein & Jean, Sebastien, 2016. "What Has Been Left to Multilateralism to Negotiate On?," Conference papers 332753, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Luiza Loredana Nastase, 2015. "Dynamism Of International Trade System- Present And Future," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(43), pages 267-274.
    6. Wesley Morgan, 2014. "Trade Negotiations and Regional Economic Integration in the Pacific Islands Forum," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(2), pages 325-336, May.
    7. Panagariya, Arvind, 2013. "Challenges to the multilateral trading system and possible responses," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-25.
    8. Robert Warner & Marlon Anatol, 2015. "Caribbean Integration—Lessons for the Pacific?," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(1), pages 183-196, January.
    9. Jean-Christophe Bureau & Houssein Guimbard & Sébastien Jean, 2016. "Competing Liberalizations: Tariffs and Trade in the 21st Century," CESifo Working Paper Series 5962, CESifo.
    10. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.

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    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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