Importance Of Preferential Trade Agreement - 1414 Words

Internal Memorandum 2 Countries are increasingly using preferential trade arrangements in order to liberalize trade. There are specific terms used in this context as such. When talking about a PTA, it should be first made clear that this is an exception the core WTO principle of MFN. Some countries are treated better than others for the purposes of such agreements, as opposed to the MFN status of the WTO, where everybody is treated the same. There are going to be increasing levels of integration associated with PTAs. The first one, according to relevant literature is the so-called free trade agreement, FTA. Under this arrangement countries will eliminate restrictions with their other ‘club members’, but will continue to add independent†¦show more content†¦The first two ways of integration deal with movements of goods and services across borders and WTO commitments. So, to be clear, it is only the FTAs and Customs Unions towards which WTO rules are addressed. The WTO has certain commitments that members agree to, surrounding these preferential trade agreements. On an FTA, where the FTA and customs union are treated under art. XXIV of the GATT, the commitments under the agreements are required that the restrictions on non-members cannot be increased. You can eliminate the barriers among your buddies, but you cannot increase the tariffs on non-members. With the customs union, since there will be a common policy towards non-members, there could be some instances where some good ’s tariffs go up for a particular member and down for another. So, it is looking at policies as a whole. There will be a requirement for compensation as such. The other expectation is that the restrictions both under the FTA or customs union need to be removed by members on substantially all trade and within a reasonable amount of time. So, the idea is that an FTA or customs union will not be only for the auto industry or only for the agricultural industry, it should be for trade, as a whole. Some agreements in practice do not meet this criteria and it is possible that a member could bring a dispute settlement case against two other WTO members, who are not living upShow MoreRelatedThe Effect Of Preferential Trade Agreement On The Trade Of Paraguay976 Words   |  4 Pagesof the engagement in preferential trade arrangement on the trade of Paraguay. Preferential trade agreements (PTAs) have become a prevalent tool for regional economic collaboration. Despite its recognition and popularity, however, many economists are still skeptical of the effectiveness of PTAs. Preferential trade agreements (PTAs) are critical parts of the world’s current multidimensional trading system. The agreements allow nations to engage in regional or exclusive free trade cooperation. 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