FTA Trade in Goods Agreements: ‘Entrenching’ the benefits of reciprocal tariff concessions
- FTA Trade in Goods Agreements: ‘Entrenching’ the benefits of reciprocal tariff concessions
- Kim, Jong Bum
- Issue Date
- Series/Report no.
- KDI Working Paper Series;07-03
- Despite the proliferation of free trade agreements (FTAs) between nations today, academics and
policy makers alike have yet to fully understand what aims do trading nations have when they
pursue free trade agreements. This paper provides an explanation that an FTA is a contract
through which FTA partners agree to a reciprocal exchange of preferential market access.
Trading nations pursue FTAs to avoid exclusionary effects on non-members by securing
preferential market access with FTA partners. Review of FTA tariff elimination provisions
reveals that FTAs ensure that the expected benefits obtained from tariff elimination or
reductions are protected from any future actions by an FTA partner or a third party. The paper
concludes with a cautionary observation that the chance of a successful multilateral trade round
is further reduced as the exclusionary effects of existing FTAs provide further incentives for
non-parties to form new FTAs.
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