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

Andriamananjara, Soamiely, Competitive Liberalization: Preferential Trade Agreements and the Multilateral Trading System (May 7, 2003). US International Trade Commission Office of Economics Working Paper, Available at SSRN: https://ssrn.com/abstract=405080 or http://dx.doi.org/10.2139/ssrn.405080

Soamiely Andriamananjara (Contact Author)

World Bank - World Bank Institute (WBI) ( email )

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