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Do SouthSouth preferential trade agreements undermine the prospects for multilateral free trade?

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  • Paul Missios
  • Halis Murat Yildiz

Abstract

Due to trade diversion, there have been concerns expressed over the proliferation of preferential trade agreements (PTAs) that include South countries. In this paper, we compare welfare across different geographic configurations of bilateral free trade agreements (FTAs) and customs unions (CUs) and examine their implications for the stability of multilateral free trade. While NorthNorth PTAs do tend to yield higher global welfare than SouthSouth PTAs, a single SouthSouth FTA may make free trade more sustainable than any other single agreement. With pre-existing NorthNorth agreements and a large enough cost asymmetry between regions, an additional South member or a new SouthSouth agreement always makes free trade harder to sustain.

Suggested Citation

  • Paul Missios & Halis Murat Yildiz, 2017. "Do SouthSouth preferential trade agreements undermine the prospects for multilateral free trade?," Canadian Journal of Economics, Canadian Economics Association, vol. 50(1), pages 111-161, February.
    • Handle: RePEc:cje:issued:v:50:y:2017:i:1:p:111-161
    DOI: 10.1111/caje.12253
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    Cited by:

    1. Matthias Helble & Zulfiqar Ali & Jera Lego, 2018. "A Comparison of Global Governance Across Sectors: Global Health, Trade, and Multilateral Development Finance," ADBI Working Papers 806, Asian Development Bank Institute.
    2. Cao, Vi & Fu, Haifeng & Wang, X. Henry, 2025. "Asymmetric free trade agreements," Economics Letters, Elsevier, vol. 250(C).
    3. Hideo Konishi & Minoru Nakada & Akihisa Shibata, 2024. "Free trade agreements with environmental provisions between asymmetric countries: transfer of clean technology and enforcement," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(1), pages 1-30, January.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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