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Preferential Trade Agreement Purpose

By markelton, December 15, 2020

One of the fundamental principles of trade liberalization is the non-discrimination provided for in Articles I of the GATT, II of the GATS and IV of the TRIPS agreement. This principle, Most Favoured-Nation (MFN), means that WTO members must not discriminate against their trading partners. Therefore, if a member pays a favour to one member, he must grant the same favour to others. However, as an exception to this principle, paragraphs 4 to 10 of GATT Article XXIV have been introduced. It allows for the creation of an agreement between members, whereby one member can grant more favourable trade terms to other parties to the agreement, not to other WTO members. The enabling clause, which aims to increase the participation of developing countries, was also introduced as an exception to the MFN in favour of developing countries. It allows the establishment of PTAs for preferential trade agreements between these countries. Given the recent proliferation of bilateral TTPs and the emergence of mega-PTAs (broad regional trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP) or the Trans-Pacific Partnership (TPP), a global trading system managed exclusively under the WTO now seems unrealistic and the interactions between trade systems must be taken into account. The increasing complexity of the international trading system resulting from the proliferation of EPZs should be taken into account when considering the choice of countries or regions used by countries or regions to promote their trade relations and environmental agendas. [2] ATPs have grown rapidly; In the 1990s, there were just over 100 PTAs. In 2014, there were more than 700.

[3] It is clear from this definition that the current formulation of the provisions of the PTA in the WTO system is not only an exception to a trade principle (MFN), but rather runs counter to the fundamental principles of the organization and that the PTA rules appear to be superior to those of the WTO. It`s true; THE EDPs are a creation of the WTO, but the way they operate makes it comparable to the WTO and even almost superior. PTAs can now be considered “multiplied MCSEs” in different parts of the world. They sometimes take more restrictive measures than WTO rules. One of the most egregious examples is the more TRIPS measures taken in some bilateral agreements between developed and developing countries. Developed countries negotiate agreements with developing countries that are much more demanding in terms of intellectual property rights (IR) than the WTO TRIPS agreement. If the WTO does not address such situations, the TRIPS agreement could soon be replaced. It is important to act as quickly as possible on these issues, as the delay in the Doha round of multilateral negotiations plays a role in the dissemination of EPZs. These tariff preferences have led to many departures from the principle of normal trade relations, namely that members of the World Trade Organization (WTO) should apply the same tariff to imports from other WTO members.

[1] Trade diversion means that free trade agreements divert trade from a more efficient supplier, a non-member, to a less efficient supplier under the free trade agreement.