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Regional Trade Agreements Political

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The results of this paper present some useful policy implications. While the support provided by free trade agreements to the median electoral model does not necessarily imply good governance, there are concerns about the support provided by THE PTAs to the lobbying model. An RTA strongly influenced by lobbies generally results in loss of well-being due to traffic diversions (« static welfare effects ») and prevents the transition from regionalism to multilateralism (« dynamic temporal trajectory »). According to the classic vinerian approach, an RTA improves when the effect of commercial creation dominates the diversion effect of trade. Manipulation by specific interest groups representing import-competing sectors is often seen as a source of trade diversion and a « stumbling block ». Recent literature on the formation of endogenous trade agreements (z.B Maggi and Rodriguez-Clare, 1998; Mitra 2002) points out that trade agreements can serve as an instrument of engagement for a government`s engagement. Ornelas (2005) shows that free trade agreements, which reduce domestic market shares in the import and competition sectors, reduce their incentives to put pressure on the increase in external tariffs (« loss of rents »). Support for the lobbying model suggests that PMAs are less likely to function as an instrument of engagement, are less likely to be effective in rent destruction and external tariff reduction, and are therefore less likely to take multilateral liberalization measures than full-fledged RTAs. A regional trade agreement (RTA) is a treaty between two or more governments that sets the trade rules for all signatories.

Examples of regional trade agreements include the North American Free Trade Agreement (NAFTA), the Central American-Dominican Free Trade Agreement (CAFTA-DR), the European Union (EU) and the Asia-Pacific Economic Cooperation (APEC). Many ATRs contain elements that deepen regulatory cooperation and new market opportunities are created, even as participants address structural barriers in their own economies. Next-generation RTAs are working to go further. Countries wishing to participate in and benefit from global markets must increasingly integrate trade and investment measures into their broader national structural reforms. Indeed, countries may be able to use the current and future negotiations on the « beyond the border » regime as the engine of desired internal political reforms. The major structural question of whether, when and how to multilateralize the provisions in atRs is above all a political issue that governments must address. In collaboration with partners such as the WTO and the OECD, the World Bank Group provides information and support to countries wishing to sign or deepen regional trade agreements. In practical terms, WBG`s work understands that deep trade agreements are important institutional infrastructures for regional integration. They reduce business costs and set many rules in which economies are active.

If designed effectively, they can improve political cooperation between countries and thus promote international trade and international investment, economic growth and social well-being. Studies by the World Bank Group note that two recent documents (Liu, 2008 and 2010) 1 support the forecasting of the median electoral model of free trade zones and customs unions (FTAs/CUs); while the lobbying model appears to be more relevant in partial preferential trade agreements (ATPs). Given the very different nature of these agreements, this is not surprising. The « total trade requirements » provided by GATT Article XXIV for free trade agreements can help reduce lobbying activity; Limited sector coverage and many exceptions in ATPs, which are generally signed between developing countries under the enabling clause, may encourage lobbying.

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