Preferential trade agreements

4 important questions on Preferential trade agreements

Free trade area

An agreement on the part of a set of countries to eliminate trade restrictions among themselves

What is the difference between trade creation and trade diversion

Trade creation occurs when the formation of a PTA leads to a switching of imports from a high cost source to a low cost source

Tariff rate arbitrage

Problem occurs in the form of a FTA, product can be imported into a low tariff member and resold into a high tariff member.
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Rules of Origin (ROO)

Rules of origin are the criteria needed to determine the national source of a product.

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