Preferential vs. Multilateral Trade Liberalization: Evidence and Open Questions

Nuno Limão , World Trade Review 5(2) , 155-176 , July 2006.

All but one WTO member currently trade under one or more preferential trade agreements (PTAs). Despite the concern since the early 1990s that these agreements may be a stumbling block to multilateral trade liberalization (MTL) their numbers have risen at an increasing rate in the last 15 years. As preferential liberalization appears to become the rule rather than the exception, it is essential to ask whether there is evidence that it affects MTL. To do so we analyze recent empirical research that finds the US's and EU's PTAs were a stumbling block to their MTL in the Uruguay Round. We also propose new empirical work to answer more definitively whether PTAs are a stumbling block to worldwide MTL.

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