Regional trade agreements (RTAs) have grown significantly over the last few decades, fundamentally shifting global trade patterns. While proponents argue that RTAs foster closer international cooperation and economic integration, sceptics point out that regional blocs can distort global trade patterns by shifting trade from low-cost external producers to higher-cost partners within the bloc.
As nations negotiate new trade pacts, policymakers must weigh the benefits of increased trade volume within trade blocs against the potential inefficiencies created by trade discrimination.
Distinguish between trade creation and trade diversion.
