ABSTRACT
The strategy or tactics of trade policy started to take center stage with the advent of preferential trade arrangements such as the "new" European Community. This chapter suggests that several reasons why preferential trade arrangements (PTA) prove controversial. It utilizes the term preferential trade arrangement generically to include free-trade areas, customs unions, common markets, and economic unions. Some "centrists" in the PTA versus no-PTA debate pronounce some preferential arrangements as acceptable and others unacceptable based on whether "natural" trading partners comprise the members. Almost all accepted free trade as the goal and nondiscriminatory multilateralism through the General Agreement on Tariffs and Trade (GATT) as the strategy; tactics were left largely to politicians and policy makers. Economists' differential exposure to, understanding of, and tolerance of what Paul Krugman has called "GATT-think" also explains differing perceptions of PTAs. Despite frequent portrayal as enemies or substitutes, the GATT and preferential trade arrangements share important common experiences and issues.
