ABSTRACT

This chapter shows that regional integration affects trade, foreign direct investment and migration in a number of different ways. It argues that there are many different regional provisions which can have different effects. Trade and location effects arise when the regional integration changes the pattern of trade and the location of production. There are various ways in which Regional Trade Agreements (RTA) or regional integration efforts affect national economies. J. Viner suggested that the effects of regional integration can be either trade-creating, when trade replaces domestic production, or trade-diverting, when partner country production replaces trade from the rest of the world. The key negotiations on market access within RTAs focus on tariff reduction, particularly the degree to which parties to RTAs grant each other regional trade preferences. There are three types of regional trade rules that may affect investment: regional tariff preferences, rules of origin and non-tariffbarriers.