Comparing international trade policies: the EU, United States, EFTA and Japanese PTA strategies

This paper assesses the substance of EU preferential trade agreements compared to those of the United States, EFTA and Japan. The topic is important because of the growth of PTAs but also because PTAs are destined to remain at centre stage. The debate on PTAs is not therefore about whether and how they might grow in importance but rather how they reflect trade policy preferences of the parties and how preferential and multilateral approaches will interact. While PTAs can promote liberalisation in particular sectors and help generate economic growth, preferential liberalisation will always be second best to multilateral liberalisation on an MFN basis because of the trade and investment diversion inherent in preferential deals. In this light, the paper proposes policy recommendations for the EU, covering, first, the broad objectives and desired outcomes of EU trade policy in general, second, the overall framework of EU PTA policy; and third, specific, sectoral, goals of EU PTA policy.