Taking the Preferences Out of Preferential Trade Agreements: TTIP as a Provider of Public Goods?
Forthcoming in: The TTIP in a Multipolar World, Global Impact of an Evolving Transatlantic Relationship (eds. J.-F. Morin, T. Novotna, F. Ponjaert & M. Telo)
15 Pages Posted: 23 Jul 2014 Last revised: 10 Aug 2014
Date Written: July 21, 2014
Preferential trade agreements (PTAs), of which TTIP is but a recent incarnation, are not as "preferential" as they used to be. Traditional PTAs mainly exchanged "club goods", that is, goods or tariff concessions that are "non-rivalrous" (use by one does not diminish availability to others) but "excludable" (some can be excluded from use). Modern PTAs are increasingly providing "public goods" that is, goods or concessions that are "non-rivalrous" and "non-excludable": they are available to everyone irrespective of whether one contributed to producing the good. More precisely, whereas most commitments in traditional PTAs (tariff concessions) were exclusive to PTA partners, many commitments in 21st century PTAs are either de facto or de jure extended on a most-favored nation (MFN) basis to outsiders too, often unconditionally, sometimes conditionally. With reference to recent PTAs between South Korea and the EU/US, this contribution identifies five types of "public goods" that TTIP is likely to provide: "public goods" by necessity, volition, MFN, circumvention or emulation. It also tries to explain how bilateral trade agreements manage to offer public goods and offers thoughts on what this means for the global trading system and the WTO moving forward.
Keywords: preferential trade agreements, WTO, public goods, transatlantic relations
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