regional trade agreements

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Agreements between groups of countries to trade with each other more freely than with the world in general. There are numerous RTAs, and most world trade is affected by one or more of them. RTAs differ greatly in their effectiveness. Some have major effects, notably the Common Market of the European Union, and the North American Free Trade Agreement, including Canada, Mexico, and the US. Many RTAs unite developing countries, for example Mercado del Sur, whose members are Argentina, Brazil, Paraguay, and Uruguay. It is thought that regional arrangements are preferred to full multilateral liberalization because of the extreme difficulty in reaching worldwide agreement; they are preferred to unilateral trade liberalization because of a desire to get improved access to foreign markets and worries about the effects of unilateral liberalization on the balance of payments. It is unclear whether RTAs are a step towards more general world free trade, or an obstacle to achieving it.

Subjects: Economics.

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