Preferential trade agreements (PTAs) are trade pacts that reduce tariffs for member countries. PTAs are the first stage of economic integration, reducing trade barriers between participating nations. While they lower tariffs among members, external tariffs remain. PTAs can have benefits like trade creation, but also costs like trade diversion if members shift imports away from more efficient non-member producers. The proliferation of Asia-Pacific PTAs increases potential for both regional trade growth and trade diversion given some countries' high dispersed external tariffs.