Regional Trade Agreements: Designs for Development

Regional trade agreements (RTAs) are fundamentally altering the world tradelandscape.1 The number of agreements in force, now more than 200, hasrisen sixfold in just two decades (figure 1). Today, more than one-third of global trade takes place between countries that have some form of reciprocal RTA. The European Union and United States are playing a prominent role in this prolif-eration (figure 2). The Central American Free Trade Agreement is only the latest of more than a dozen U.S. RTAs.2 The European Union, through its Economic Partner-ship Agreements, is using RTAs to restructure trading relations with the African, Caribbean, and Pacific countries that benefited from Cotonou preferences. This chapter addresses two questions: • What characteristics of RTAs strongly promote—or hinder—development for member countries? • Does the proliferation of RTAs pose risks to the multilateral trading system? If so, how can those risks be managed? Identifying what works: open regionalism RTAs are often one component of a larger political effort to deepen economic relations with neighboring countries.3 As such, they can create opportunities t