Regional Trade Agreements and Preferential Trade Arrangements

What is a regional trade agreement or preferential trade arrangement?

A regional trade agreement (RTA) or preferential trade arrangement (PTA) is a treaty, scheme, or contractual agreement that one or more governments arrange or agree to rule their trade relationships and market access conditions. Through trade agreements, governments agree on a range of obligations that include preferential tariffs for goods, commitments for services market access, intellectual property rights, and competition and investment measures, among other provisions. 

How can trade agreements affect my business? 

Regional trade agreements (RTAs) provide preferential market access, such as lower than MFN or zero tariffs for trade in goods between the RTA parties. They also increasingly have chapters related to trade facilitation, SPS and TBT measures, and intellectual property rights, all of which may impact your business. 

Preferential trade arrangements (PTAs) are usually provided by World Trade Organization (WTO) Members to developing country Members in the form of reduced tariffs for goods. Businesses can claim these benefits by meeting rules of origin (see guide on rules of origin) and other conditions stated in the text of these arrangements. 

What are the different types of RTAs and PTAs? 

PTAs are unilateral, involving an arrangement where one government provides preferential access to imports from one or more governments without receiving anything in return. 

RTAs may be on a bilateral basis between two governments, or may involve multiple governments in the same region or across regions. Visit the World Trade Organization and International Trade Centre websites for more information on trade agreements.

Below we explain both types of arrangements in further detail.

  1. Unilateral agreements: also known as PTAs, these provide unilateral trade preferences to the markets of the member that has developed the PTA, without requiring that beneficiary countries grant the same preferences in return. These preferences can come in the form of zero or lower import tariffs for products and only cover trade in goods. An example of a PTA includes the Generalized System of Preferences schemes (under which developed economies grant preferential tariffs to imports from developing economies). PTAs can also involve more limited schemes such as the United States’ African Growth and Opportunities Act (AGOA) or the European Union’s Everything But Arms (EBA) scheme. These are subject to a waiver granted by WTO Members and subject to review and renewal.
  2. Reciprocal agreements: Reciprocal agreements are also known as regional trade agreements (RTAs) and cover rules and conditions applicable for trade in goods and services. They include free trade agreements (FTAs), customs unions, and partial scope agreements. Governments signing these agreements provide each other preferences and share benefits in terms of lower trade barriers and preferential market access. In addition, RTAs can include provisions on investment, customs cooperation and trade facilitation, trade and environment, trade and labor, and other areas.

How do I know if my products benefit from preferential treatment under an RTA or PTA? 

Trade agencies, industry associations, and chambers of commerce may have information on how you can benefit from trade agreements. The WTO’s RTA Database and PTA Database provide information on tariff preferences and other provisions such as customs procedures, SPS and TBT measures, to name a few examples, under all RTAs and PTAs notified to the WTO. 

Businesses can also visit the Rules of Origin Facilitator, a tool that identifies preferential tariffs under trade agreements, so long as these goods meet the rules of origin requirements included under these agreements. Through the Facilitator, businesses can find opportunities for preferential market access under trade agreements that can apply to their products. Visit the Rules of Origin Facilitator to learn more.