But there are already about 420 regional trade agreements in place around the world, according to the World Trade Organization. While not all of them are free trade agreements (FTAs), they still shape global trade as we know it. The best possible outcome of trade negotiations is a multilateral agreement involving all major trading countries. Then, free trade will be expanded to allow many participants to get the most out of trade. After World War II, the United States helped establish the General Agreement on Tariffs and Trade (GATT), which quickly became the world`s largest multilateral trade agreement. COMESA aims to remove all barriers to intra-regional trade, from preferential tariffs to a common market and a duty-free economic union. The European Union is today a remarkable example of free trade. Member countries form an essentially borderless entity for trade purposes, and the introduction of the euro by most of these countries continues to lead the way. It should be noted that this system is governed by a Brussels-based bureaucracy that has to deal with the many trade-related issues that arise between the representatives of the Member States. The bloc has largely abolished all export and import tariffs on items traded between nations. It has also reached agreements with a number of other countries, including China, that abolish tariffs on about 90 percent of imported goods. But MERCOSUR remains one of the world`s leading economic blocs and has a major impact on South American trade and the global economy.

Although MERCOSUR was conceived as a single Latin American market that allows the free movement of people, goods, capital and services, this vision has not yet become a reality. Internal conflicts have slowed progress towards the elimination of tariffs and the free movement of people and goods. As a result, many countries have turned away from the multilateral process and turned to bilateral or regional trade agreements. One such agreement is the North American Free Trade Agreement (NAFTA), which entered into force in January 1994. Under NAFTA, the United States, Canada and Mexico agreed to phase out all tariffs on trade in goods and reduce restrictions on trade in services and foreign investment over a decade. The United States also has bilateral agreements with Israel, Jordan, Singapore, and Australia, and is negotiating bilateral or regional trade agreements with countries in Latin America, Asia, and the Pacific. The European Union has also concluded free trade agreements with other countries around the world. Deep trade agreements are an important institutional infrastructure for regional integration. They reduce trade costs and set many of the rules by which economies work. If made effective, they can improve political cooperation between countries, thereby increasing international trade and investment, economic growth and social prosperity. World Bank Group studies show that: Fundamentally, free trade at the international level is no different from trade between neighbors, cities or states.

However, it allows companies in each country to focus on producing and selling the goods that make the best use of their resources, while other companies import goods that are scarce or unavailable in the domestic market. This combination of local production and foreign trade allows economies to grow faster while better meeting the needs of their consumers. While free trade offers overall benefits, the removal of a barrier to trade for a particular good harms the shareholders and employees of the domestic industry that produces that good. Some of the groups affected by foreign competition have sufficient political power to obtain protection against imports. Therefore, despite their considerable economic costs, barriers to trade remain. According to the United States International Trade Commission, for example, the U.S. profits from the lifting of trade restrictions on textiles and clothing would have been nearly twelve billion dollars in 2002 alone. This is a net economic gain after deduction of losses for businesses and employees in domestic industry. Nevertheless, domestic textile producers managed to convince Congress to maintain strict import restrictions. Although the WTO enshrines the principle of non-discrimination in international trade, Article 24 of the GATT allows for the formation of free trade areas and “customs unions” among WTO Members.

A free trade area is a group of countries that abolish all tariffs on trade between them, but retain autonomy in setting their tariffs with non-members. .