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Businesses in Member States benefit from increased incentives to trade in new markets as a result of the measures contained in the agreements. The main criticism of free trade agreements is that they are responsible for outsourcing employment. There are seven drawbacks: trade agreements open many doors for businesses. With access to new markets, competition intensifies. Increasing competition is forcing companies to produce better quality products. It also leads to greater diversity for consumers. If there are a variety of high quality products, companies can improve customer satisfaction. Full integration of Member States is the last level of trade agreements. In collaboration with partners such as the WTO and the OECD, the World Bank Group provides information and support to countries wishing to sign or deepen regional trade agreements. In practical terms, WBG`s job is to remove barriers to trade. This is an advantage because it acts as a catalyst for more trade and growth, as states have easier access to foreign markets.

RTAs are, by their nature, much smaller than mega-regional trade agreements and extremely extensive global trade agreements. This makes it much easier and quicker to successfully conclude a regional trade agreement because there are fewer parties involved. International relations and peacekeeping are another advantage of regional trade agreements. If the common interests of countries are protected by a mutually beneficial pact, they are less likely to break the pact and come into conflict, at the risk of harming their respective economies. The EU – a regional trade agreement in the broadest sense – is a perfect example of how RTAs reduce the likelihood of war. Common economic security has been one of the foundations of the EU and has been created in a targeted way to end the ability of European nations to go back to war. Free trade agreements are treaties that regulate the tariffs, taxes and tariffs that countries collect for their imports and exports. The most well-known regional trade agreement in the United States is the North American Free Trade Agreement.

The effects of regional trade agreements (ATRs) on countries׳ welfare are controversial. In this article, we evaluate these effects using stock market returns from an up-to-date dataset that spans 200 RTA ads, 80 savings and 20 years. We measure the impact of news on ATRs on domestic stock market returns after adjusting these returns for international stock market movements. We then link these unusual returnees to the characteristics of the RTA members and to the agreements themselves. We find strong evidence of the natural trading partner hypothesis; Stock markets rise more strongly when RTAs are signed between countries that already have high trading volumes.