A series of rules governing trade that were first created in 1947 by twenty-three countries. By the time it was replaced with the WTO, there were 125 member nations.

The basic underlying principle of GATT was that trade should be free and equal

A GATT provision that required member countries to automatically extend to all member countries the same benefits, usually tariff reductions, they agreed on with any other countries.

The organization that succeeded GATT and came into effect January 1, 1995. It is the only institutional body charged with facilitating free and fair trade between member nations. It has 153 member nations

This type provides for economic cooperation as in a free-trade zone. Barriers to trade are removed between member countries. The primary difference from the free trade area is that members agree to treat trade with nonmember countries in a similar manner. The Gulf Cooperation Council (GCC) that consists of six Middle Eastern countries is one example.

The Pros of Creating Regional Agreements Include: Trade Creation

These agreements create more opportunities for countries to trade with one another by removing the barriers to trade and investment. Due to a reduction or removal of tariffs, cooperation results in cheaper prices for consumers in the bloc countries. Studies indicate that regional economic integration significantly contribute to the relatively high growth rates in the developing countries.

By removing restrictions on labor movement, economic integration can help expand job opportunities.

The flip side to trade creation. Member countries may trade more with each other than with nonmember nations. This may mean increased trade with a less efficient or more expensive producer because it is in a member country. In this sense, weaker companies can be protected inadvertently with the bloc agreement if it acts as a trade barrier. In essence, regional agreements may functionally create new trade barriers with countries outside the trading bloc.

Countries may move production to cheaper labor markets in member countries. Similarly, workers may move to gain access to better jobs and wages. Sudden shifts in employment can tax the resources of member countries 

A disruption of trade due to a natural disaster, political conflict, or economic instability may have severe consequences for all participating countries within a trading bloc.

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden, and the United Kingdom*

* The UK voted in June 2016 to prospectively exit the EU, in what is commonly referred to as Brexit. The terms of the withdrawal and any subsequent trade agreement remain under negotiation, including whether the decision can be revoked. The UK is scheduled to leave the EU in March 2019. 

Albania, Montenegro, Serbia, Turkey, The former Yugoslav Republic of Macedonia

Bosnia, Herzegovina, and Kosovo under UN Security Counsel Resolution 1244

It’s easier to recruit skilled labor if the conditions within a country are stable and relatively risk-free.  For example, companies have challenges in recruiting nonmilitary personnel to work in the fledgling private sectors in countries like Iraq or Afghanistan. Even development organizations have been challenged to send in skilled talent to develop banking-, finance-, and service-sector initiatives. Historically, regardless of which country or conflict, development staff has only been sent into a country after stability has been secured by military force.  In modern conflicts, development staff often are needed to provide civilian and humanitarian services during conflicts, increasing the risk. In such cases, companies have to pay even higher levels of hardship and risk pay and may still not necessarily be able to recruit the best talent.

In unstable environments, companies fear loss or damage to property and investment. For example, goods in transit can easily be stolen, and factories or warehouses can be damaged.

Unclear, poorly enforced, and constantly changing business rules make it hard for firms to plan for the long term and may dissuade them from entering a new market in the first place.