Free Trade Agreements (FTAs) have emerged as the policy tool of choice for many countries seeking to promote exports. However, much of world trade still takes place outside FTAs. This Article explores the reasons behind low utilization of FTAs. Further, it considers mechanisms to increase utilization of FTAs, such as the active participation in global value chains. The alternative to FTAs is the selective lowering of import duties on an MFN basis. This article finds that lower import duties could create conditions for high growth in trade and investment and help the economy in at least four ways: increase in export, improvement in ease of doing business, reduction in export promotion schemes and reduction of impact on the local industries. Finally, the article concludes that reduction in duties must be accompanied by the establishment of quality and standard infrastructure.
Global Trade and Customs Journal