Types Of Preferential Trade Agreement

The preferential trade agreement requires the least commitment to removing trade barriers Trade barriers are legal measures taken primarily to protect a country`s national economy. They generally reduce the amount of goods and services that can be imported. These barriers are put in place in the form of tariffs or taxes and, although Member States do not remove barriers between them. There are also no common trade barriers in preferential trade zones. Preferential trade agreements (EPZs) are formal trade agreements between countries that benefit from trade between them. In many cases, these benefits are the local product; Nearby countries are better able to trade because of lower transport costs and increased transparency opportunities. When trade agreements are constructed in this regional way, they are sometimes referred to as regional trade agreements or RTAs. The question of whether EPZs increase or divert trade are the subject of much discussion. The basic principles of these two arguments are that while the PTA may promote trade that would not otherwise exist, it also has the potential to steal trade that would otherwise take place with members outside the EPZ and far from the cheapest producer. Ideally, the creation of trade should take precedence over trade diversion. [1] Trade agreements are an agreement between two or more countries on certain terms of trade, trade, transit or investment. These are usually mutually beneficial concessions.

In this type of agreement, two or more partners grant preferential import duty to certain products. This means reducing tariffs on an agreed number of tariff lines. This is a positive list, i.e. giving preferential access to the list of products on which the two partners have agreed. The thumb can even be reduced to zero for some products, even in a ZEP. India has signed a EPZ with Afghanistan. Regional trade agreements refer to a treaty signed by two or more countries to promote the free movement of goods and services beyond the borders of its members. The agreement contains internal rules that Member States comply with each other.

As far as third countries are concerned, there are external rules to which members comply. The framework agreement first defines the scope and provisions for the direction of the potential agreement between trading partners. It foresees a new field of discussion and sets the period for future liberalisation. India has already signed framework agreements with ASEAN, Japan, etc. Given the recent proliferation of bilateral TTPs and the emergence of mega-PTAs (broad regional trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP) or the Trans-Pacific Partnership (TPP), a global trading system managed exclusively under the WTO now seems unrealistic and the interactions between trade systems must be taken into account.