Competitive Liberalization: Preferential Trade Agreements and the Multilateral Trading System
US International Trade Commission Office of Economics Working Paper
14 Pages Posted: 16 Jun 2003
Date Written: May 7, 2003
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.
Keywords: Competitive liberalization, Multilateralism, Preferential Trade Agreements
JEL Classification: F02, F15, F13
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
On the Size and Number of Regional Integration Arrangements: A Political Economy Model