A treaty defining the rules of trade for all signatories is known as a regional trade agreement (RTA), and it is made up of two or more governments.
The North American Free Trade Agreement (NAFTA), the European Union (EU), the Asia-Pacific Economic Cooperation (APEC), and the Central American and Dominican Republic Free Trade Agreement (CAFTA-DR) are a few examples of regional trade agreements.
In 1990, there were fifty trade agreements in effect. In 2017, there were over 280.
Today, tariffs are just one topic of discussion in many trade agreements; other policy areas that impact investment and trade in goods and services are also covered.
‘Deep’ RTAs are those that encompass a broader range of policy domains, both at and beyond the border; ‘Shallow’ RTAs deal with tariffs and other border measures.
Comprehensive trade agreements are a crucial component of the institutional framework for regional integration. They lower trade costs and establish a number of economic regulations.
If effectively crafted, they have the potential to enhance policy collaboration among nations, consequently boosting global commerce and investment, economic expansion, and societal well-being.
More so than shallow agreements, deep agreements increase trade, foreign investment, and participation in the global value chain (GVC). Deeper agreements boost GVC integration by more than 10%, services trade by more than 15%, and goods trade by more than 35% on average.
Four Categories of Regional Trade Agreements
Researching international trade law can be challenging due to the multiple tiers of trade associations and exchanges.
Trade agreements come in three different flavors: regional, bilateral, and multinational.
Every one of these agreements has its own policies, history, and dispute resolution processes.
This guide’s objective is to give an overview of the various resources that are accessible both online and on campus.
The major multilateral trade agreements, regional trade agreements, and United Nations trade bodies will next be covered in the guide.
Benefits of Regional Agreements
Promoting Trade and Economic Growth
One of the primary objectives of RTAs is to facilitate trade between member countries by reducing or doing away with trade barriers like tariffs and quotas. Trade flows, economic expansion, and competitiveness among the participating countries may all rise as a result.
Pushing for Regional Integration
RTAs encourage member countries to work together on a number of matters, such as infrastructure development, regulatory harmonization, and investment policy. This could lead to increased cooperation, integration, and stability in the region.
Drawing in Foreign Investment
By promoting a more stable and predictable business environment, regional trade agreements (RTAs) can help draw in foreign investment to their member nations. Consequently, this could promote the growth of jobs, technology transfer, and economic expansion.
Facilitating Access to New Markets
Free trade agreements (RTAs) can help member countries expand their international influence and obtain entry to new markets. This could be especially helpful for small and medium-sized enterprises (SMEs), who might find it challenging to navigate the complex international trade regulations and processes.
Encouraging Specialization and Innovation
RTAs can promote the efficient allocation of resources and free up member countries to concentrate on producing the goods and services in which they have a competitive edge by eliminating trade barriers. This could lead to increased innovation, productivity, and economic growth.