Preferential trading area

"Preferential trade agreement" redirects here. For the usage of the term by the World Trade Organization, see Trade pact § By the World Trade Organization.

A preferential trade area (also preferential trade agreement, PTA) is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely. A PTA can be established through a trade pact. It is the first stage of economic integration. The line between a PTA and a free trade area (FTA) may be blurred, as almost any PTA has a main goal of becoming a FTA in accordance with the General Agreement on Tariffs and Trade.

These tariff preferences have created numerous departures from the normal trade relations principle, namely that World Trade Organization (WTO) members should apply the same tariff to imports from other WTO members.

List of preferential trade areas

Stages of economic integration around the World (each country colored according to the most integrated multilateral agreement that it participates in):

  Economic and monetary union (ECCU/XCD, Eurozone/EUR, Switzerland–Liechtenstein/CHF)

  Economic union (CSME, EAEU, EU, GCC, Mercosur, SICA)

  Common market (EEA–Switzerland)

  Customs and monetary union (CEMAC/XAF, UEMOA/XOF)

  Customs union (CAN, EAC, EUCU, SACU)

  Multilateral free-trade area (AANZFTA, ASEAN, CEFTA, CISFTA, COMESA, CPTPP, EFTA, GAFTA, PAFTA, RCEP, SADCFTA, SAFTA, USMCA)

A free trade area is basically a preferential trade area with increased depth and scope of tariffs reduction. All free trade areas, customs unions, common markets, economic unions, customs and monetary unions and economic and monetary unions are considered advanced forms of a PTA, but these are not listed below.

Multilateral

• Economic Cooperation Organization (ECO) (1992)
• Generalized System of Preferences
• Global System of Trade Preferences among Developing Countries (GSTP) (1989)
• Latin American Integration Association (LAIA/ALADI) (1981)
• Melanesian Spearhead Group (MSG) (1994)
• Protocol on Trade Negotiations (PTN) (1973)
• South Asian Preferential Trade Arrangement (SAPTA) (1999)
• South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1981)

Bilateral

• European Union – ACP countries, formerly via the trade aspects of the Cotonou Agreement, later via Everything But Arms (EBA) agreements
• India – Afghanistan (2003)
• India – Mauritius
• India – Nepal (2009)
• India – Chile (2007)
• India – MERCOSUR (2009)
• ASEAN – PR China (2005)
• Laos – Thailand (1991)

See also

• Trade and Investment Framework Agreement (TIFA)
• Bilateral Investment Treaty (BIT)

External links

• WTO PTA list
• World Bank PTA database