Furthermore, RTAs can have trade creation or diversion effects.

Trade capacity creation in the poorest countries is vital.

Its main contribution was to demonstrate to national decision makers that, if properly addressed, trade creation can contribute to the reduction of poverty rates.

Professor Winters also expressed scepticism about regional trading arrangements for developing countries, which, in his view, are as likely to produce trade diversion as trade creation.

South-South regional trade agreements (RTAs), including bilateral, regional and interregional free-trade agreements (FTAs), may constitute important instruments for trade creation, investment and regional development.

Regional and bilateral trade agreements continue to liberalize trade faster than multilateral trade agreements, but they are less efficient in net trade creation.

The trade creation effect results from changes in the demand for the relevant product in the market under consideration as a consequence of the price changes associated with the lowering of MFN tariffs.

The standard test of success for such schemes is the extent to which “trade creation” between member countries outweighs “trade diversion” from other markets and the extent to which the scheme moves the region towards freer (and greater) trade.

Just as most analyses of free trade agreements, including the European Union, conclude that trade creation has dominated trade diversion, so improved transport costs and services on a regional level are to be seen as a result and a component of the entire process of globalization.

(b) Creation of trade-related interest groups within existing regulatory networks;