The Challenge of Implementing Preferential Trade Agreements in Developing Countries – Lessons for Rule Design

Abstract

The latest generation of Preferential Trade Agreements (PTA) features a diversity of ‘deep integration’ provisions, which mandate a wide range of border and behind-the-border regulatory and institutional reforms in areas such as food safety and technical standards, customs administration, government procurement, competition policy, or services liberalization. The implementation of such obligations frequently presents developing countries with major challenges, as they face varieties of domestic structural and behavioral constraints. With a view to a better understanding of such challenges and how they can be effectively addressed, the World Bank has launched a series of case studies on PTA implementation in a dozen selected developing countries from around the world. This paper summarizes the main results of a forthcoming report, which provides an overview of the findings of the country case studies with respect to the implementation of PTA provisions in seven complex border and behind-the-border policy areas. Drawing from the empirical evidence of the case studies and the conclusions of modern policy implementation theory, it is suggested that the challenges associated with PTA implementation in developing countries can, at least partially, be addressed through ‘built-in’ flexibilities, i.e. the customization of PTA rule design to country specific structural and behavioral characteristics, and the establishment of effective institutional mechanisms that are equipped with strong mandates to monitor, analyze, support, and adjust implementation processes over time.