The Role of Regional Trade Agreements - Essay Example

The World Bank also cautions that RTAs improve economic development in one country and negatively impact economic development in another member.3 Therefore RTAs can facilitate uneven development among the member states. This will occur when RTAs divert trade from some member states and divert trade to others.4 This research paper provides a critical analysis of the role that RTAs play in the development of its member states. A definition of RTA and its historical developments are examined first.

The role of RTAs in member state development will be examined in greater detail with specific reference to the Gulf Cooperation Council (GCC) and African Regional Trade Agreements and the role that these RTAs play in the development of their respective states. Contents Abstract 2 Contents 3 Introduction 4 I.Definition and Overview of RTAs 5 A.Definition 5 B.Overview of RTAs 7 II.Development of GCC States 14 III. African RTAs 19 Analysis/Conclusion 25 Bibliography 27 Introduction There are essentially two opposing views relative to the role that RTAs play in their members’ development. . For two decades RTAs have emerged as the “defining features of the modern economy” and are largely seen as a significant influence relative to globalization.

6 By the year-end of 2005, the World Trade Organization (WTO) had received notification of at least 250 RTAs.7 Since 1995, the WTO has received at least 15 RTA notifications each year as opposed to just 3 RTA notifications annually prior to 1995.8 The proliferation in RTAs, therefore, suggests that the countries engaging in regionalism have a positive vision of what RTAs can bring them in terms of development. This paper examines the perceived developmental benefits of RTAs and critically evaluates whether these perceptions are realistic. I. Definition and Overview of RTAs In order to effectively analyze the role that RTAs play in the development of their member states, a definition and an overview of the nature and development of RTAs are necessary.

It is necessary to understand what RTAs are, how they function, and what motivates the formation of RTAs. With this understanding of RTAs, their role in the development of member states can be examined. In other words, the development will depend entirely on the developmental objective behind the formation of an RTA. For example, if an RTA is formed in order to improve and develop the member states’ economy, the role of the RTA in that regard will have to be examined. If an RTA is formed for the purpose of harmonizing regional economic and security cohesion, the role of that RTA on development by member states will have to be examined. A. Definition In simple terms RTA is defined as an agreement among “neighboring states” in which tariffs and other trade restrictions are reduced or removed.