ABSTRACT
This chapter addresses the issue as to whether preferential trade agreements (PTAs) are likely to be stepping stones or obstacles to global free trade. It examines why PTAs are formed and how they affect the global trade regime, and focuses on some specific PTAs. The chapter discusses the relationship between PTAs and globalization, the historical development of PTAs, the reasons states form PTAs, the relationship between the World Trade Organization (WTO) and PTAs, and prominent examples of PTAs. PTAs can be trade diverting because the elimination of intra-PTA 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 PTAs result in more trade creation than trade diversion.
