This essay will explain the move towards bilateral and regional trading agreements by the United States (US) during the past five years. In order to fully explain the underlying reasons for the policy shift, brief historical explanations and examples will also be included. It consists of two of two main sections, the first will explain, from a theoretical perspective, the surge of PTAs, the advantages and disadvantages of bilateral, regional and multilateral trade negotiations. The second part will focus on why there has been a radical shift in US policy being the driving force behind multilateral negotiations to implementing a growing number of bilateral and regional trading agreements.
The other main area of trade liberalisation is multilateral trade negotiations, which mainly take place under the umbrella of the World Trade Organization (WTO), previously General Agreement on Tariffs and Trade (GATT). Since the GATT's creation in 1947, multilateral trade negotiation rounds have lowered barriers to trade and created the WTO, which has 148 member nations. Central to the WTO is the Most Favoured Nation (MFN) treatment principle stating that any benefit given to one member shall automatically and unconditionally be given to all members (GATT article I). However, most PTA's are between WTO members, and almost every nation (with the exception of Taiwan, Hong Kong and Mongolia) that is a member of the WTO has also some form of PTA or is in the process of negotiating one (WTO, 1995a; Lloyd, 2002). The justification for PTA's within the WTO lies in Article XXIV, which allows PTA's, but only if they eliminate barriers to substantially all the trade between the members and the agreement does not increase protectionism, on the whole, against non-members
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