Preferential Trade Agreements Essay Example | Topics and Well Written Essays - 2000 words

Preferential Trade Agreements - Essay Example Though the prime motive behind the formation of these groups was to prevent any form of discrimination among member nations, it is being witnessed that this is not being followed in practice. In fact, existing imbalances on a regional basis have driven nations to form Preferential Trading Arrangements (PTAs) that has been the trend since the past half century. During the same period, it has also been witnessed that there has been a major growth in the degree of multilateral openness within the above organizations. The question being asked by the authors of the paper Mansfield and Reinhardt is as to why nations have relied on preferential liberalization when the prime objective of the above organizations has been to advocate non-discrimination. Additionally, the authors have also performed requisite theoretical and mathematical analysis to determine the various factors that have led to such deviations, which forms a substantial part of the paper currently under review. The major aim of the current review is to analyze the findings, claims and arguments of this paper and to determine the extent to which these claims are justified. On the backdrop of such analysis, the paper attempts to provide a suitable set of recommendations on the basis of which further analysis may be initiated. 2. SUMMARY The authors, by way of the paper, have identified that the international trading system has witnessed a rapid increase in the formation of numerous Preferential Trading Agreements (PTAs). Moreover, the authors have also expressed agreement over the fact that there has been an increased multilateral openness by way of the formation of the GATT and the WTO. However, the authors have expressed that little research has been done for determining how and due to which reasons the multilateral regime has helped in the conception and formation of PTAs by the members of these organizations themselves. The paper claims that the prime reason behind nations preferring for the formation of PTAs is to enhance their bargaining power. The formation of these agreements is perceived as providing the member nations with an opportunity to help them gain strength against any future policies of the GATT/WTO that may not go well with the economic interests of the member states. Moreover, the presence of PTAs provides the member nation with extra muscle that would help it in being more vocal and provide an opportunity to the member for greater market power and share. The authors argue that the past few years has seen a major increase in the number of members of these organizations, thereby making it more and more difficult to allow the organizations to allow at multilateral agreements and hope for any sort of collective actions. In this backdrop, the authors state positively that the formation of PTAs also helps members with similar vested economic interests in solving common problems and achie ving common objectives. In this backdrop, the authors argue that the prime reason for the rise and formation of these preferential agreements is the existence of the GATT/WTO themselves. In