Europe's Preferential Trade Agreements: Status, Content, and Implications

Preferential trade agreements PTAs comprise a variety of arrangements that favor member parties over non-members by extending tariff and other non-tariff preferences. PTAs, particularly free trade agreements FTAs, have proliferated in recent years. In the post-war period, the European Union EU, which is a PTA itself, has developed the largest network of PTAs in the world. The main findings of this report are as follows Historically, Europes PTAs have differed among its partners in terms of provisions and commitments and they have been characterized by relatively modest ambition in terms of market-opening. In comparison, the U.S. approach has been more standardized in terms of its provisions and more focused on achieving reciprocal market access. These differences in approaches, however, have significantly narrowed since the EU adopted its more commercially oriented Global Europe strategy in 2006. EU PTAs cover nearly twice as much trade exports in percentage terms 70 versus 40 and seven times as much in value terms 3.4 trillion versus 0.52 trillion than U.S. PTAs. These numbers can be used to support the argument that U.S. firms may face more discrimination and possibly reduced sales than EU firms. At the same time, the data may overstate the degree of discrimination because the amount of trade covered by PTAs is not the same as the amount of trade conducted on a preferential duty-free basis.