4.4.1—Preferential trade agreements

A preferential trade agreement gives participating economies lower trade barriers or better market access than non-participants. It may be bilateral between two economies, regional among economies in a geographic or organised group, or multilateral among many economies. A bilateral agreement negotiates preferences between two parties; a regional agreement coordinates preferences across a group; multilateral agreements establish broader shared commitments. The World Trade Organization is the key institution providing the forum and rules for multilateral trade negotiations. For example, mutual tariff preferences between two countries are bilateral, shared preferential access among a regional group is regional, and an agreement across many WTO members is multilateral. Preferential does not mean globally free trade: non-members may still face barriers. Do not confuse the number or scope of negotiating parties with the deeper institutional forms of a free trade area, customs union or common market.