Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339613 
Year of Publication: 
2026
Series/Report no.: 
Kiel Working Paper No. 2317
Publisher: 
Kiel Institute for the World Economy, Kiel
Abstract: 
We show that plurilateral agreements facilitate global tariff liberalization by creating an MFN-based margin of cooperation that leaves preferential access via preferential trade agreements (PTAs) unchanged. In a model of endogenous trade agreement formation with farsighted governments, PTAs become rigid once exclusion or freeriding incentives bind, constraining further PTA expansion. Plurilateral agreements relax these constraints by allowing countries to liberalize selectively in a differentiated goods sector without altering existing PTAs. As a result, the stable equilibrium trade network consists of the PTAs that would arise absent plurilaterals, augmented - but not replaced - by plurilateral MFN liberalization. This mechanism provides an explanation for the growing role of sectoral plurilateral agreements within the WTO as preferential liberalization becomes increasingly constrained.
Subjects: 
Plurilateral Agreements
Preferential Trade Agreements
Global Free Trade
WTO
JEL: 
F12
F13
F15
F18
Document Type: 
Working Paper

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