Free Trade Agreements in the World Trade System: Substance and Semantics

Date01 February 2020
Published date01 February 2020
AuthorPrema-chandra Athukorala
DOI10.1177/0015732519886771
Subject MatterArticles
Free Trade Agreements
in the World Trade
System: Substance and
Semantics
Prema-chandra Athukorala1
Abstract
Over the past three decades, free trade agreements (FTAs) have become an
integral and enduring part of the global trading system. The number of FTAs
notified to the World Trade Organization increased from 19 in 1990 to 292 by
January 2019.1 However, debate on the economic case for following the FTA
path as an alternative to multilateral and unilateral trade liberalisation is far from
settled. The purpose of this note is to assess key themes of this policy debate.
The focus is solely on the economic rationale of FTAs, even though political
considerations play a key role in the proliferation of FTAs.
JEL Codes: F13, F15, F55
Keywords
Free trade agreement, rules of origin, foreign trade, World Trade Organization
FTAs and Trade Opening
By definition, a free trade agreement (FTA) is a treaty between two or more coun-
tries under which all tariffs are eliminated on goods produced in member coun-
tries while tariffs on trade with non-member countries are maintained. However,
in practice, tariff concessions are given on a selective basis depending on lobby
group pressure in the process of FTA negotiation and perhaps genuine concerns
about industrial adjustment problems associated with trade opening. The cover-
age of the eligibility list varies significantly among FTAs. Even for the products
Article
1 Crawford School of Public Policy, Australian National University, Canberra, Australia.
Corresponding author:
Prema-chandra Athukorala, Crawford School of Public Policy, Australian National University,
Canberra ACT 2600, Australia.
E-mail: prema-chandra.athukorala@anu.edu.au
Foreign Trade Review
55(1) 13–20, 2020
© 2019 Indian Institute of
Foreign Trade
Reprints and permissions:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/0015732519886771
journals.sagepub.com/home/ftr

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