3 - The political economy of PTAs

Summary

Introduction: Re-thinking the paradigm of Bilateral/Regional Trade Agreements

Why do countries conclude bilateral/regional trade agreements? Numerous researchers have sought to answer this question, most often through creating a typology of the agreements. Such efforts, however, have been in vain. A bilateral/regional trade agreement is rarely, if ever, based on a single motive, and two or more parties to an agreement can often have different and sometimes even conflicting objectives (e.g., one seeking market access and the other political support). In fact, different actors within each country itself can also have different objectives (e.g., one sector seeking trade creation whilst another trade diversion). Thus, any typology is bound to create artificial categories, and would not necessarily give a proper or accurate answer to the original question.

Sometimes, countries fall into a similar trap by trying to explain the rationale behind their bilateral/regional trade policy. For example, the European Commission recently acknowledged that it had been predominantly motivated by political considerations in concluding trade agreements with countries that were candidates for European Union (EU) membership (with the exception of Mexico, South Africa, and Chile). Although such a policy is in line with the EU's neighbourhood and development objectives, it does little to serve the EU's central trade interests.