We study, theoretically and empirically, how countries choose intra-bloc tariffs and preferential margins when they … form Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically lower preferential … margins when the bloc takes the form of a free trade area (where members set external trade policies independently), relative …

Trade Agreement (PTA) formation. First, it shapes the nature of forces constraining expansion of Free Trade Agreements (FTAs … played by PTAs in the attainment of global free trade. Initially, tariff binding liberalization leads to Custom Union (CU …) formation in equilibrium but in a way that undermines the pursuit of global free trade. However, further tariff binding …