ABSTRACT
This chapter addresses the issue as to whether these regional trade agreements (RTA) are likely to be stepping stones or obstacles to global free trade. It examines why RTA's are formed and how they affect the global trade regime and focuses on some specific RTA's. The chapter discusses the relationship between regionalism and globalization, the historical development of RTA's, the reasons states form RTA's, the relationship between the World Trade Organization (WTO) and RTA's, and prominent examples of RTA's. RTA's can be trade-diverting because the elimination of intra-regional trade barriers shifts some imports from more efficient outside suppliers to less efficient regional suppliers. General Agreement on Tariffs and Trade (GATT) Article 24 seeks to ensure that RTA's result in more trade creation than trade diversion. Although GATT Article 24 was to apply to all RTA's, less developed country (LDC) receive special treatment.
