The move to preferential trade on the Western Pacific Rim: Some initial conclusions

Since the turn of the century the Asia-Pacific region has become the most active location for the negotiation of preferential trade agreements (PTAs) - a dramatic change from the period before the financial crises of 1997-98. Substantial variance in scope exists among the more than 80 PTAs currently being implemented, negotiated or which are under study in the region. Those involving the United States are by far the most comprehensive. At the other end of the spectrum are those involving ASEAN and China, which are largely 'aspirational' in their provisions. This variance points to the range of economic and political objectives that PTAs serve. Regardless of the comprehensiveness of their coverage, the overall economic effects of the new PTAs is likely to be small given the prevailing low level of tariffs, the intervention of other factors such as fluctuating exchange rates, the proliferation of agreements (which removes the advantages they accord individual partners), and the unwillingness of governments to liberalise 'sensitive' sectors. Few of the agreements move substantially beyond existing WTO provisions. The proliferation of PTAs not only has tended to shift attention and resources away from negotiations at the global level but also runs the risk of fragmenting the 'pro-liberalisation' coalition in countries that have signed multiple agreements.