ABSTRACT
Regional trade agreements (RTA) have become the present buzz tone of the world economy as the primary step to move towards greater integration. The benefits from economic integration often do not appear for an individual country without cost. Hence, a group of countries form a consortium and attempts to negotiate among themselves by forming a particular economic zone or bloc. But such a bloc could create trade for some inefficient countries within the region by diverting trade from efficient countries outside the region. As a result, the net benefit of a country in the region may not necessarily be always positive. While a country from outside the region possesses a comparative advantage and trades with a particular country within a bloc, the regional integration may not be effective because of trade diversion from the region. Therefore, the region as a whole needs to negotiate with other growing regions to narrow down those inefficiencies and to derive benefits from those regions. Often it is quite difficult to pursue consolidated effects of integrating two separate regions due to political and geographical differences between them. If a single country takes the initiative to build bilateral relation with a growing country outside the region, it might have negative consequences on the progress of regional integration within the bloc. Although such a move drifts gradually towards greater integration, it is restricted for various infrastructural, political, institutional and geographical barriers.
