Do SouthSouth preferential trade agreements undermine the prospects for multilateral free trade?

Paul Missios and Halis Yildiz

Canadian Journal of Economics, 2017, vol. 50, issue 1, 111-161

Abstract: Due to trade diversion, there have been concerns expressed over the proliferation of preferential trade agreements (PTAs) that include South countries. In this paper, we compare welfare across different geographic configurations of bilateral free trade agreements (FTAs) and customs unions (CUs) and examine their implications for the stability of multilateral free trade. While NorthNorth PTAs do tend to yield higher global welfare than SouthSouth PTAs, a single SouthSouth FTA may make free trade more sustainable than any other single agreement. With pre-existing NorthNorth agreements and a large enough cost asymmetry between regions, an additional South member or a new SouthSouth agreement always makes free trade harder to sustain.

JEL-codes: F12 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Do South-South Preferential Trade Agreements Undermine the Prospects for Multilateral Free Trade? (2015)
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