Over the past three decades, free trade agreements (FTAs) have become an integral and enduring part of the global trading system. The number of FTAs notified to the World Trade Organization increased from 19 in 1990 to 292 by January 2019.1 However, debate on the economic case for following the FTA path as an alternative to multilateral and unilateral trade liberalisation is far from settled. The purpose of this note is to assess key themes of this policy debate. The focus is solely on the economic rationale of FTAs, even though political considerations play a key role in the proliferation of FTAs.
BhagwatiJ. (2008). Termites in the trading system: How preferential agreements undermine free trade. Oxford: Oxford University Press.
4.
CattaneoO. (2009). The political economy of PTAs. In SimonL.MercurioB. (Eds.), Bilateral and regional trade agreements: commentary and analysis (pp. 28–51). Cambridge, MA: Cambridge University Press.
5.
CheongI.JungranC. (2009). An empirical study on the utilization ratio of FTAs by Korean firms. Journal of Korea Trade, 13(2), 109–126.
6.
DollarD.MaryH. D.MengistaeT. (2005). Investment climate and firm performance in developing economies. Economic Development and Cultural Change, 54(1), 1–31.
7.
IrwinD. A. (2008). Free trade under fire. Princeton, NJ: Princeton University Press.
8.
FalveyR.ReedG. (2002). Rules of origin as commercial policy instruments. International Economic Review, 43(2), 393–407.
Hallward-DriemeierM. (2003). Do bilateral investment treaties attract foreign direct investment? Only a bit…and they could bite (Policy Research Working Paper No. 3121). Washington, DC: The World Bank.
11.
JongwanichJ.KohpaiboonA. (2017). Exporter responses to FTA tariff preferences: Evidence from Thailand. Asian-Pacific Economic Literature, 31(1), 21–38.
12.
KrishnaK. (2006). Understanding rules of origin. In CadotO.EstevadeordalA.Suwa-EisenmannA.VerdierT. (Eds.), The origin of goods: rules of origin in regional trading agreements. Oxford, England: Oxford University Press.
13.
KrishnaP. (2014). Preferential trade agreements and the world trading system: A multilateralism view. In FeenstraR.TaylorA. M. (Eds.), Globalization in an age of crisis: Multilateral economic cooperation in the twenty-first century (pp. 131–160). Chicago, IL: University of Chicago Press.
14.
KrugmanP. (1991). Is Bilateralism bad? In HelpmanE.RazinA. (Eds.), International trade and trade policy. Cambridge, MA: MIT Press.
15.
MenonJ. (2014). Multilateralisation of preferences versus reciprocity when FTAs are underutilized. The World Economy, 37(10), 1348–1366.
16.
MichaelyMichael. (1999). Trade preferential agreements in Latin America: An ex-ante assessment (Policy Research Working Paper No. 1583). Washington, DC: The World Bank.
17.
PerkinD. (2013). East Asian development: Foundations and strategies. Cambridge, MA, England: Harvard University Press.
18.
RatnayakeR. (2017, August9). ETCA and the FTS agenda: Sri Lanka is a latecomer vis-à-vis fast growing South East Asian countries. Daily FTA, 8–9.
19.
RodrikD. (2018a). Straight talk on trade: Ideas for a sane world economy. Princeton, NJ: Princeton University Press.
20.
RodrikD. (2018b). What do trade agreements really do?Journal of Economic Perspectives, 23(2), 73–90.
21.
StevensC.MuhammadI.IsabellaM.JaneK. (2015). The impact of free trade agreements between developed and developing countries on economic development in developing countries: A rapid evidence assessment. London: Overseas Development Institute.
22.
World Trade Organisation (WTO). (2011). World Trade Report 2011. Geneva: WTO.
