On 5 October, 12 nations signed an agreement that, if ratified, will form the largest trade bloc in the world, accounting for roughly 40% of global income. The Trans-Pacific Partnership (TPP) brings together the US, Canada, Japan and nine other Pacific Rim economies—although, notably, neither China nor India are involved at the moment. The TPP is a prime example of what economists call a preferential trade agreement (PTA).
With the Doha round of multilateral trade negotiations under the World Trade Organization (WTO) all but dead, attention has shifted to PTAs as an avenue to jumpstart global trade. Yet, PTAs—as distinct from multilateral trade liberalization under the WTO—raise a host of distinct analytical questions. There is by now a lot of literature in economics that analyzes both the economics and the political economy of preferential—as opposed to multilateral—trade liberalization.
This has been excerpted from a 1 November 2015 news item by Mint on Sunday and is available in its entirety at: http://mintonsunday.livemint.com/news/the-trans-pacific-partnership-and-indias-trade-strategy/2.4.1926295954.html