Preferential Trade Agreements: Theory and Evidence

Pravin Krishna
Additional contact information
Pravin Krishna: Johns Hopkins University

Chapter 12 in Palgrave Handbook of International Trade, 2013, pp 349-366 from Palgrave Macmillan

Abstract: Abstract Strongly influenced by the perception that restricted commerce and preferences in trade relations had contributed to the economic depression of the 1930s and the subsequent outbreak of war, the discussions leading to the General Agreement on Tariffs and Trade (GATT) in 1947 were driven by the desire to create an international economic order based on a liberal and non-discriminatory multilateral trade system. Enshrined in Article I of the GATT, the principle of non-discrimination (commonly referred to as the most-favored-nation or MFN clause) precludes member countries from discriminating against imports based upon the country of origin. However, in an important exception this central prescript, the GATT, through its Article XXIV, permits its members to enter into preferential trade agreements (PTAs), provided these preferences are complete. In so doing, it sanctions the formation of Free Trade Areas (FTAs), whose members are obligated to eliminate internal import barriers, and Customs Unions (CUs), whose members additionally agree on a common external tariff against imports from non-members. Additional derogations to the principle of non-discrimination now include the Enabling Clause, which allows tariff preferences to be granted to developing countries (in accordance with the Generalized System of Preferences) and permits preferential trade agreements among developing countries in goods trade.

Keywords: Free Trade Area; Preferential Trade; Trade Diversion; Internal Barrier; Trade Creation (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30531-1_12

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230305311

DOI: 10.1007/978-0-230-30531-1_12

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().