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A General Analysis of Regional Trade Agreements
Nolan Walsh #6912870
University of Ottawa
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Abstract
The primary purpose of this paper is to create a general, analytical overview of regional trade
agreements: what they are, the impact they have, what makes them effective, as well as looking to
data provided from real world examples the North American Free Trade Agreement and European
Union.
Regional Trade Agreements are a treaty that aims to promote trade liberalization between two or
more countries through lowering, removing, or altering tariffs and taxes in trade with the involved
countries, with the primary goal of causing more economic growth for the countries involved than
they would have without the agreement being in place. They are simply defined by the WTO as
“as reciprocal trade agreements between two or more partners. They include free trade agreements
and customs unions.” Some current examples being the North American Free Trade Agreement
(NAFTA), the European Union Free Trade Agreement (EU) and the recently under fire Trans
Pacific-Partnership.
What Impact Do RTAs Have?
To understand the impact that an RTA will have on an economy one must comprehend that there
are in fact, downsides to trade, and there are winners and losers, despite RTAs typically having a
net positive benefit. Trade Liberalization is almost universally viewed as a good thing among
economists; however, it may cost certain groups of people their jobs, as the domestic economy
moves to more efficient forcing them to switch sectors, which can be difficult. Trade liberalization
leads to a shift in resources from domestic suppliers who are less efficient, to more efficient foreign
suppliers, in turn allowing the domestic and foreign countries to specialize where they have a
comparative advantage by moving resources to said good or service; However, this shifting of
resources can bring complications, as it is challenging for a person to be able to shift what sector
