As regional trade agreements are emerging in many parts of the world, there are many debates about their welfare implications. There are three important features of this regionalization. First, almost the countries are belong to at least one trade blocs. Second, almost the trade blocs are formed by neighboring countries. Third, regional trade agreements are almost taken place simultaneously. The regional trade agreements are posing a trade-off. Favorable effects come from the elimination in the relative price between domestic goods and the goods from other countries of the same union. The unfavorable effects arise from the distortion in the relative price between the members and nonmembers. In this paper, the trade-off is between trade creation and trade diversion,and the study is only based on the model of Viner, the external tariffs and transport costs valued, but "open regionalism" and the Mcmillan criterion will be proposed next paper.
