In her article, Daniela Caruso fears that the exclusive dismantling of tariff and non-tariff trade barriers to a limited number of countries by RTAs could lead to trade diversion and thus harm third parties. Should the legal system provide remedies that would allow third parties to require parties to internalize costs?  Outside of the article, Ronald Coase`s response would be that the internalization of costs by the parties is not necessarily the most socially desirable; Instead, an assessment of the entire social system must be carried out.   Bagchi argues that the smaller the number of people affected by a private act, the more concentrated the externality and the stronger the case for a private law remedy. See Aditi Bagchi, Other People`s Contracts, 32 YALE J. REG. 211, 229 (2015). In the context of trade diversion, concentrated externality must be understood as an externality that disproportionately affects a particular economy. See Caruso, loc. cit. Note 3, 413–14. There are two main avenues for potential litigants who want to challenge the legality of trade diversion. The first way would be to take legal action for violating WTO rules, as described by Howse.
The second would be the “non-infringement clause”, which allows one GATT and WTO member government to claim compensation from another for the negative trade effects of its respective policies; Even if such a policy did not violate specific obligations under the GATT and WTO treaties, there would be an “adverse change in competition”.  In other words, the latter route, the “non-infringement clause”, can be invoked in the event of a breach of the legitimate expectations of the injured business partners.  The general conditions of negotiation prior to the respondent`s conduct would be used as a measure to determine the existence and extent of the harm resulting from the change in trade flows. The analysis of the negative distributional effects of RTAs, i.e. the unfavourable change in competition, would then be put forward. In addition, the scope and scope of RTAs have also raised concerns about their legality. RTAs could be understood as a form of monopolized trade, due to the encouraged cooperation that increases internal productivity between the parties while excluding other trading partners. TTIP and CETA only affect advanced economies, while RCEP and TPP are trade agreements between developed and developing countries.  4. Our empirical approach is most closely related to Magee (2008), which estimates the impact of trade agreements based on a panel of 133 countries from 1980 to 1998.
Carrere (2006), which uses a gravitational model to assess the effects of trade creation and diversion, is also closely related. Our contribution stems from the broader coverage of RTAs and countries, our focus on the impact of RTAs on entry and exit in the region, and our presentation of the role of CMGs. Free trade agreements are a subsection of the official website of the Foreign Trade Information System (SICE) of the Organization of American States. It provides documents on specific trade agreements as well as other related topics. In addition, information on customs unions and preferential agreements is available. In fact, countries that rely on the regional value chain to leverage their inputs benefit most from the RTA. By reducing production costs, an RTA reduces marginal costs for companies in the agreement area. As a result, the increase in industry production favors more exports from the region to the rest of the world. These results can be interpreted as a manifestation of the fact that globalization benefits the performance of industry through regional input-output networks. Regional trade agreements (“RTAs”) have become a fundamental mode of international trade negotiation and regulation. The further dismantling of tariff and non-tariff barriers to trade and general cooperation among nations on trade issues are currently being negotiated mainly within the framework of RTAs. As a result, the number and scope of RTAs since the early 1990s has been unprecedented due to the stagnation of global trade negotiations.
In a second part, we extend an intra-industrial trade model to trade in intermediate products. .