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

In: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century

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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.
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Suggested Citation

  • Pravin Krishna, 2013. "Preferential Trade Agreements and the World Trade System: A Multilateralist View," NBER Chapters,in: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, pages 131-160 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:12584
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    References listed on IDEAS

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    Cited by:

    1. Jayjit Roy, 2014. "On the robustness of the trade-inducing effects of trade agreements and currency unions," Empirical Economics, Springer, pages 253-304.
    2. Michel Fouquin & Jules Hugot, 2016. "Back to the Future: International Trade Costs and the Two Globalizations," VNIVERSITAS ECONÓMICA 015130, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    3. Jean-Christophe Bureau & Houssein Guimbard & Sébastien Jean, 2016. "Competing Liberalizations: Tariffs and Trade in the 21st Century," Working Papers 2016-12, CEPII research center.
    4. Jayjit Roy, 2014. "On the robustness of the trade-inducing effects of trade agreements and currency unions," Empirical Economics, Springer, pages 253-304.

    More about this item

    JEL classification:

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

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