The strategic effects of preferential trade agreements

Abstract

Most analysts agree that the recent proliferation of Preferential Trade Agreements (PTAs) is largely the result of exasperation with multilateral trade liberalisation through the World Trade Organisation and a defensive response to the large-scale adoption of PTAs by major economies. The spread of PTAs, however, suggests that there are motivations other than economic that are inspiring these trade deals. It is becoming increasingly obvious that the use of PTAs to gain or reinforce strategic benefits, or to forestall strategic disadvantage, has been a major but largely unacknowledged driver of the recent trend towards PTAs. Three profound shifts in the international system over the past 15 years have led to the declining utility of traditional security institutions and thus the search for new forms of strategic deal-making: an enduring crisis of security institutions; the rise of new great powers; and the arrival of non-state security threats. In response, both large and small powers have resorted to a range of instruments, including strategically-driven PTAs.