Plurilateral Trade Agreements: A Complementary Margin to Preferential Liberalization

Lasha Chochua, James Lake and Gerald Willmann

No 12564, CESifo Working Paper Series from CESifo

Abstract: We show that plurilateral agreements facilitate global tariff liberalization by creating an MFN-based margin of cooperation that leaves preferential access via preferential trade agreements (PTAs) unchanged. In a model of endogenous trade agreement formation with farsighted governments, PTAs become rigid once exclusion or free-riding incentives bind, constraining further PTA expansion. Plurilateral agreements relax these constraints by allowing countries to liberalize selectively in a differentiated-goods sector without altering existing PTAs. As a result, the stable equilibrium trade network consists of the PTAs that would arise absent plurilaterals, augmented---but not replaced---by plurilateral MFN liberalization. This mechanism provides an explanation for the growing role of sectoral plurilateral agreements within the WTO as preferential liberalization becomes increasingly constrained.

Keywords: plurilateral agreements; preferential trade agreements; global free trade; WTO (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 F18 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12564

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