ABSTRACT
Existing economic studies of regional and bilateral trading agreements have highlighted the costs and benefits involved, but have not effectively considered the geopolitical rationales behind trade agreements. Sherman Robinson and Karen Thierfelder (1999), for example, claim that preferential trade agreements (PTAs) generate substantial increases in trade among member-states, and that the addition of more countries to any given arrangement can be expected to heighten the welfare of old and new members alike (see also Kemp and Wan 1976). On the other hand, Alan Winters and Won Chang (2000) show that the existence of PTAs compels surrounding states to cut prices for their exports, effectively diminishing global welfare. Jagdish Bhagwati (2008, 69) likewise argues that the proliferation of fundamentally discriminatory PTAs has generated chaos in the international economy, leading to severe ‘distortions in trade and investment’ in the world as a whole (see also Bhagwati and Panagariya 1996).
