During the past two decades, nearly every country that participated in GATTAt the Bretton Woods conference following World War II, representatives of the United States, Great Britain, France, Russia, and 40 other countries created GATT to reduce barriers to international trade. It was an agreement not an organization. The functions of GATT were taken over by the World Trade Organizationan international body dealing with the rules of trade between participating nations when it was established in 1990. or the WTOan international body dealing with the rules of trade between participating nations has also joined with neighboring countries in some form of regional trade arrangement. These regional trade arrangements differ in structure and in the issues that they negotiate, but they have a common objective: to increase trade and prosperity through the mutual reduction of barriers to the exports of neighboring countries.

A key premise of these regional trade arrangements is that neighboring countries, which sometimes share cultural and language ties, can expand trade more rapidly than can countries separated by great distances. It is also sometimes easier for small groups of countries in the same region to agree on ways to reduce trade barriers than it is for more than 140 countries across the globe to do so in a broad multilateralmultiple countries working together to on a specific issue trade round.

Regional trade agreements have proliferated in recent years. Bilateral and regional “free-trade agreements” have also played a larger role in recently, seeking not only to reduce but also to eliminate nearly all restrictions on trade among participating countries. Arrangements that partially or fully embrace free trade among countries within a given region have been established in North America, Europe, Southeast Asia, the southern part of South America, the Andean region of South America, Central America, and in several African sub-regions.

The United States participates in several of these regional and bilateral arrangements and, through the Office of the United States Trade Representative, is currently negotiating several more. Under the North American Free Trade Agreement (NAFTAa treaty between the U.S., Canada and Mexico, which eliminated tariffs on many products traded between the three countries. It also protects intellectual propertyIntellectual property refers to the creations of the mind, such as inventions, literary or artistic works, and the symbols, names, and designs used in commerce. and outlines the removal of investment restriction amongst the three countries.), which took effect in 1994, the United States, Mexico, and Canada are phasing out barriers to each other’s imports.

The United States is also engaged in an ambitious set of negotiations aimed at concluding a free trade agreement covering the entire Western Hemisphere, called the Free Trade Agreement of the Americas. Thus far, these negotiations have been delayed by some of the same issues facing the Doha round; agriculture and the trade of services remain staple issues. As of 2005, the FTAA has not been signed. Critics argue that the FTAA only serves to propagate global poverty and inequality. The FTAA has not reported any news on major proceedings since 2006.¹⁴

The equivalent of NAFTAa treaty between the U.S., Canada and Mexico, which eliminated tariffs on many products traded between the three countries. It also protects intellectual propertyIntellectual property refers to the creations of the mind, such as inventions, literary or artistic works, and the symbols, names, and designs used in commerce. and outlines the removal of investment restriction amongst the three countries. in East Asia is the Association of South East Asian Nations (ASEAN), which comprises ten members (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Mynanmar, The Philipines, Singapore, Thailand, and Vietnam), but not China and Japan.  The European Union (EU) differs from both NAFTAa treaty between the U.S., Canada and Mexico, which eliminated tariffs on many products traded between the three countries. It also protects intellectual propertyIntellectual property refers to the creations of the mind, such as inventions, literary or artistic works, and the symbols, names, and designs used in commerce. and outlines the removal of investment restriction amongst the three countries. and ASEAN because it deals not only with trade preferences but also includes political arrangements, policies on immigration, and a common currency, the euro (introduced on January 1, 2002).

Beyond the Western Hemisphere, the United States has announced or completed bilateral trade agreements with members of the Middle East Free Trade Area, Asia-Pacific Economic Cooperation, Southern African Customs UnionA customs unions isany group of nations that has agreed to eliminate tariffs on goods traded among members, while imposing common external tariffs on goods entering from outside the group. The European Union is the best-known example., and the Manufacturing Free Trade Area with Australia. Each of these groups was formed to liberalize trade between countries in the same region, with whom they do the most business. Most countries trade with their neighbors, and also with the United States and the European Union.

Learn more:

• Proliferation of Bilateral and Regional Free Trade Agreements May Threaten Multilateralmultiple countries working together to on a specific issue Talks
• U.S. Lawmakers Approve CAFTA
• Rethinking NAFTAa treaty between the U.S., Canada and Mexico, which eliminated tariffs on many products traded between the three countries. It also protects intellectual propertyIntellectual property refers to the creations of the mind, such as inventions, literary or artistic works, and the symbols, names, and designs used in commerce. and outlines the removal of investment restriction amongst the three countries.’s Environment and Labor Agreements
• What Mexico and Canada think about NAFTAa treaty between the U.S., Canada and Mexico, which eliminated tariffs on many products traded between the three countries. It also protects intellectual propertyIntellectual property refers to the creations of the mind, such as inventions, literary or artistic works, and the symbols, names, and designs used in commerce. and outlines the removal of investment restriction amongst the three countries.
• Video interview with a former Assistant U.S. Trade Representative, Regina Vargo, on the Free Trade Agreement of the Americas
• Video interview with William Brock, former Senator and U.S. Trade Representative, on the proliferation of regional trade agreements.

Next: The Changing Composition of Trade