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The issue of “preference erosion” which raises concerns, in regard to the RTAs, refers to:
The shift of imports from low-cost countries, which are non-participants in the RTA, to higher-cost RTA parties due to the lowering of tariffs among RTA parties
The lowering of tariffs among RTA parties results in non-participating developing countries losing the competitive advantage they had through preferential market access schemes
The displacement of a RTA party’s higher-cost production with lower-cost imports from another party
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