Final answer:
A preferential trade agreement does indeed provide special treatment to certain trade partners, which can discriminate against others, balancing domestic protectionism and international trade commitments.
Step-by-step explanation:
True. A preferential trade agreement grants special treatment to certain trading partners, which can lead to discrimination against others.
In the context of global trade, these agreements often present a paradox. On one hand, governments establish protectionist policies to shield domestic industries from foreign competition by imposing tariffs or quotas on products such as sugar or textiles. On the other hand, international trade agreements like the WTO aim to reduce trade barriers and promote free trade globally. Preferential trade agreements can enable nations to circumvent protectionist pressures from domestic interest groups by pursuing strategic trade openings with select countries, sometimes even at the expense of their commitments to broader trade organizations.
Nevertheless, these agreements can also cause tension within the international trading system, as regional deals may restrict trade with non-member nations and potentially conflict with global trade norms set by the World Trade Organization.