Measuring the Effect of Regional and Preferential Trade Agreements on Multilateral Trading Systems
World trade has been an ever evolving phenomenon and the agreements made to govern this have also been evolving. In order to stabilise and centralise trade agreements, multilateral trading system came into being and people thought that this is an ultimate solution to facilitate trade among different nations and take care of any issues emerging thereby. As the time passed by, many countries started to feel the need to have a close agreement within a concentrated setting and as a result regional trade agreement (RTA) and preferential trade agreements (PTA).
With mushrooming number of RTAs and PTAs, it became essential to assess the extent to which these agreements have been capable of changing economic scenario around the …show more content…
Understanding Trade Agreements
Regional Trade Agreements (RTAs) are the formed as by a group of countries in order to reduce barriers of trade between the member countries. In contrast to its name, these groups are formed between countries around the world, not necessarily belonging to the same geographical region. There are a number of RTAs around the world that have changed the very nature of the trade between the countries (Crawford, & Laird, 2001).
On the other hand, PTA is nothing but a union wherein members impose lower barriers in trade on the goods produced within the union, with having some flexibility for each of the member countries on the extent of reduction. A PTA is nothing but the part of RTA only (Hudec, & Southwick, 1999).(Fig.1)
Fig.1: Forms of RTAs (Source: Das, 2001)
Commitment and RTAs
The degree or the exit point for the countries who are conducting trade with the outside the agreement, are makinga collaboration with less effective agreements, at least as perceived through expert surveys. Studies show a need to examine all the dimensions of trade