Answer to Question #67980 in Microeconomics for yk

Question

discuss whether preferential trade agreements (or regionalism) are helping or hindering the achievement of global free trade.

Answer 1

A 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. So, we can conclude, that such agreements are helping the achievement of global free trade.