A regional trade agreement (RTA) is a treaty between two or more governments that sets out the trade rules applicable to all signatories. Regional trade agreements include the North American Free Trade Agreement (NAFTA), the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), the European Union (EU) and the Asia-Pacific Economic Cooperation (APEC). Not surprisingly, financial markets see the other side of the coin. Free trade is an opportunity to open up another part of the world to local producers. Few topics separate economists from the general public as much as free trade. The research findings indicate that economists at U.S. university faculties are seven times more likely to support free trade policy than the general public. In fact, the American economist Milton Friedman said, “The economic profession almost agreed on the desire for free trade.” The United States currently has a series of free trade agreements. These include multinational agreements such as the North American Free Trade Agreement (NAFTA), which covers the United States, Canada and Mexico, and the Central American Free Trade Agreement (NAFTA), which includes most Central American nations. There are also separate trade agreements with countries ranging from Australia to Peru. Since the 2008 financial crisis, there has been a trend towards mega-regional trade agreements. These are located between more than two countries and concern a significant part of world trade or investment.
These agreements include the Regional Economic Partnership (RCEP), the Trans-Pacific Partnership (TPP), the Trade in Services Agreement (TiSA) and the Transatlantic Trade and Investment Partnership (TTIP). The European Union is today a remarkable example of free trade. The Member States form an essentially unlimited unit for the purposes of trade and the introduction of the euro by most of these nations paves the way. It should be noted that this system is regulated by a Brussels-based bureaucracy, which has to deal with the many trade-related issues that arise between representatives of the Member States. In the modern world, free trade policy is often implemented through a formal and reciprocal agreement between the nations concerned. However, a free trade policy can simply be the absence of trade restrictions. Or there could be directives that would exclude certain products from duty-free status in order to protect domestic producers from foreign competition in their sectors. Regional trade agreements are multiplying and changing in nature.
Fifty trade agreements were in force in 1990. In 2017, there were more than 280. In many trade agreements, negotiations today go beyond tariffs and cover several policies that influence trade and investment in goods and services, including rules across the border, such as competition policy, government procurement rules and intellectual property rights. ASAs covering tariffs and other border measures are “superficial” agreements; ATRs, which cover a larger group of policy areas, at and below the border, are “deep” agreements. . . .