Ineffective producers within the block can be protected from more efficient producers outside the block. For example, inefficient European farmers can be protected from cheap imports from developing countries. Trade diversion occurs when trade is diverted by efficient producers outside the trade zone. [36] R Chand, Asia Free Trade Area (Academic Foundation, 2006), 14 There is also evidence that regional trading blocs, when designed according to rules of openness and inclusion, can be building blocks, unlike stumbling blocks for global investment and free trade. According to Carbaugh, regional blocs can improve overall market opening in different ways. [25] First, because of greater harmonization of interests and less complex negotiating procedures, regional blocs may achieve greater economic integration than multilateral discussions. Secondly, a regional free trade area leads to the creation of a process of self-reinforcing, as the bloc-based market becomes increasingly attractive for non-member states to join the bloc in order to obtain the same trade preferences as Member States. Third, regional liberalization promotes unilateral change in workers from import-competing firms, where the country`s comparative advantage is more pronounced. As the amendment continues, the part of the staff that benefits from liberalized trade increases and the part that is at the end decreases. The result is that there is political support for trade liberalization in a self-economic process.

For these reasons, if trading blocs are formed according to the principles of honesty, trade blocs can overlap and expand, which will promote internationally liberalized trade from the bottom up. [26] In this sense, Kwan and Qiu state that it is assumed that regional trade agreements and multilateral trade negotiations are linked. [27] It is hoped that by forming a regional free trade agreement, countries will push for the liberalization of multinational trade. While the creation of trade blocs such as the European Union and NAFTA (North American Free Trade Agreement) has led to the creation of trade between members, it is also more difficult for countries outside the country to trade, which leads to what is called a trade reorientation, where a company that would otherwise have acquired activities in that country is prevented from doing so because of a trading bloc and the obstacles they have erected for third countries. At the end of these deliberations, the Council adopts a decision on the signing of the agreement on behalf of the EU. It then sends the signed agreement to the European Parliament for approval. But elsewhere, there is a chance that NAFTA will gradually be extended to much of Central and South America. This is evident in the fact that, since 1987, the United States has adhered to 16 “framework agreements with Latin American countries.” In addition, the U.S. Expected Free Trade Area (FTA) has a framework agreement of 34 North and South American states.

Such a regulation would most likely strengthen political stability throughout the geographical area, with a significant increase in trade and investment. [41] [29] WTO, undated, “Understanding The WTO: The organization,” seen on 21 May 2011, The Council plays a crucial role in the design of a new trade agreement. [9] P Khandelwal, COMESA and SADC: Prospects and Challenges for regional trade integration, Issues 2004-2227 (International Monetary Fund, 2004), 14. Sovereign nations unite, usually at the regional level, to conclude free trade agreements. Free trade agreements will be put in place to reduce trade barriers and boost trade between Member States. Member States that are part of the free trade area act freely with each other, while maintaining trade barriers and tariffs for third countries.