What effect will regional free trade have on international trade?

Question

What effect will regional free trade have on international trade?

Answer 1

The effects depend on the distribution of competitive advantages within the region and between the region and the world.

Trade is predominantly characteristic signatures of relative competitive advantages.  

If countries in a region are fairly homogeneous in their competitive advantages, a lowering of trade barriers within the region should have less material impact on international trade pattern.  

On the other hand, when a lowering of a barrier redirected trade from an international country to a regional one because the two had previously been alternative competitive sources, the formation of a regional free trade zone may materially impact international trade.