When the General Agreement on Tariffs and Trade (GATT) metamorphosed into the World Trade Organization (WTO) in 1994, it seemed that the third pillar of the international economic superstructure was finally in place. And yet with the failure of member countries to close the Doha Round of trade negotiations and the emergence of bilateral and plurilateral preferential trade arrangements (PTAs) such as the Trans-Pacific Partnership (TPP), the future of the multilateral WTO seems uncertain.
The recent proliferation of free trade areas and customs unions in the world trading system has led to an explosive revival of interest in the economic analysis of Preferential Trade Arrangements (PTAs). The principal theoretical question of the 1950s and 1960s (Viner) was whether PTAs would create or divert trade, causing welfare improvement or loss. The principal theoretical question (Bhagwati) of the late 1980s and 1990s has been whether PTAs encourage or discourage the worldwide nondiscriminatory freeing of trade.