Preferential Trade Agreements

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International Trading Blocs Preferential Trade Agreements (PTAs) Preferential Trade Agreements or trading blocs are a form of economic integration in which countries agree to create a free trade area or some form of common market to facilitate trade. This agreement can be in different forms and depths, for instance there is Free Trade Area is a trading bloc that has no tariff, then Custom Union is where there is common level of trade barriers, in Economic unions such as European Union, the member countries have open national policies and a common currency (Euro). There are several forms of regional trade areas, varying according to the extent to which countries extend cooperation and provide concessions to their member countries. For instance Free Trade Agreements eliminate all tariffs for countries in the agreement; PTA provides preferential treatment to its trading allies. TRIAD refers to three regional free-trade blocs which include NAFTA (USA, Mexico and Canada), EU (27 nations primarily located in Europe) and ASEAN (10 Asian countries). These are also grouped around some common currencies (the euro, the yen and the dollar) According to Fan Zhai (2006) by 2005 in Asia, there were 18 bilateral trade agreements and at least 30 new preferential trade agreements. The graph below is a glimpse of different regional trade agreements in Asia. Recent trends Trade diplomacy is now a part of the relationship that a country shares with another. After the establishment of WTO, 20 PTAs are formed on average on yearly basis. However one can notice the decline in regional cooperation, as cross-regional agreements are increasing in number. According to Heydon Ken (2010) over half of the world’s trade is through preferential trade ag... ... middle of paper ... trade that new opportunities can be built and the current conflicts between a number of nations can be resolved. Increased regional integration can have wide ranging benefits for member countries. Works Cited Bonapace Tiziana and Mikic Mia MULTILATERALIZING REGIONALISM: TOWARDS AN INTEGRATED AND OUTWARD-ORIENTED ASIA-PACIFIC ECONOMIC AREA [Report]. - [s.l.] : Heydon Ken The rise of bilateralism: implications for ASEAN, and beyond [Online] // East Asia Forum. - feb 1, 2010. - Mar 28, 2011. - Zhai Fan PREFERENTIAL TRADE AGREEMENTS IN ASIA: ALTERNATIVE SCENARIOS OF “HUB AND SPOKE” [Report]. - : ERD Working Paper, Asian Development Bank, 2006.
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