Theory and applications of the preferential trading agreements

Abstract

A preferential trading agreement (PTA) is actually a trade pact between countries that reduses tariffs for certain products to the countries who sign agreement. While the tariffs are not necessarily eliminated, they are lower than countries not party to the agreement. It is a form of economic integration. The trade agreements actually want to promote free trade. These trade rounds last many years, during wich countries negotiate trade barrier reductions.(Trade restrictions and trade policy). Negotiating these and other trade-related issues is actually difficult and the trade rounds can actually be very long.