What Is Preferential Trade Agreements

Each free trade agreement is negotiated and agreed separately by the participating countries. A country may be a member of several free trade agreements. Preferential rules of origin are applied to prevent third countries from benefiting from preferential tariffs under a free trade agreement without presenting reciprocal benefits. The way in which free trade agreements are designated may also be different. Most free trade agreements are designated by listing the participating countries and adding the term “FTA.” For example, the Canada-Korea Free Trade Agreement. However, some free trade agreements are called under different names. For example, the Canada-EU free trade agreement is referred to as a comprehensive economic and trade agreement. Other countries call their trade agreements Economic Partnership Agreements (EPAs) or Global Economic Partnerships (CEPs). Other variants are also used. First, it is one of the names that are sometimes used for free trade agreements, to emphasize their preferential nature, in contrast to trade liberalization under the WTO or unilateral reduction of tariffs.

In principle, we can distinguish between unilateral trade agreements and systems (offered from one side to the other) and reciprocal trading systems (negotiated and approved by both parties). The World Trade Organization unilaterally designates preferential trade agreements and reciprocal trade agreements as regional trade agreements. Most of the reciprocal agreements covered by this instrument are free trade agreements. Free trade agreements (FTAs) remove barriers to trade between members and provide preferential access to markets on a reciprocal basis. In addition to trade in goods, free trade agreements generally cover trade in services and investment rules and remove tariff and non-tariff barriers. They may also include a number of provisions relating to customs cooperation and trade facilities, as well as harmonising standards and promoting regulatory cooperation in various areas. A turnkey example is the Generalized Preference System (GSP): a one-sided preferential program proposed by many industrialized countries (for example. B United States, Switzerland, Japan and the EU) for a number of developing and least developed countries. Preferential rules of origin are applied to prevent third countries from benefiting from preferential tariffs offered to select GSP recipient countries. All of the above agreements are free trade agreements, but for a variety of reasons, members prefer to name them under another name. In many cases, these names reflect the broader scope of agreements: many recent free trade agreements go beyond the scope of traditional trade agreements and cover areas such as public procurement, competition, intellectual property, sustainable development, labour and the environment, etc. Regional Trade Agreements (ATRs) – The WTO uses the term “regional trade agreements” as a generic for all reciprocal agreements, such as trade agreements, free trade agreements and partial agreements.

This is because such agreements were primarily within the jurisdiction of the WTO Regional Trade Agreements Committee. In reality, such trade agreements should not include members. B from the same region (e.g., EU-Canada or Peru-South Korea free trade agreements).