Preferential trading agreements are in the news again in New Zealand
The world trade system is a growing assortment of discriminatory trade agreements known as the ‘spaghetti bowl’ for reasons that the diagram of regional trade agreements (RTAs) in the Western Hemisphere makes clear.
Preferential trade agreements are the correct name for the political spin masters call free trade agreements or regional trade agreements.
- A preferential trade agreement is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing or abolishing tariffs and other trade restrictions for the members of the trade bloc.
- A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff.
Everything you need to know about trade blocs, preferential trading agreements, and customs union is in a book written by Jacob Viner in 1951. His book The Customs Union Issue introduced the distinction between the trade-creating and…
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