The failure to conclude the Doha Round agreement under the auspices of the World Trade Organization gives rise to the proliferation of free trade agreements (FTAs).The question of whether free trade agreements are “stepping stones” or “stumbling blocks” to a global free trade system still remains to be answered. Regional power structure has a bearing upon the establishment of FTAs, but rational institutional design proves to be a necessary condition for a well-functioning free trade zone. On the other hand, the role played by ideas and identities in the conclusion of FTAs is hard to grasp and measure. The pursuit of FTAs comes out of considerations of economic, political and security interests, and if the state “black box” is opened up, it is clear that political institutions and domestic interest groups also affect policy-making processes and policy outcomes.