Multilateral tariff binding liberalization affects the formation of Preferential Trade Agreements (PTAs). It influences the expansion of Free Trade Agreements (FTAs) and the pursuit of global free trade. Under high tariff bindings, non-members of FTAs have an incentive to free ride, while members have an exclusion incentive under low bindings. Initially, tariff binding liberalization leads to Custom Union (CU) formation, which hinders global free trade. However, further liberalization leads to FTA formation, which helps achieve global free trade.