Trade blocks can either help or hinder global trade liberalization. The key factor is whether trade within the block focuses on traditional strengths or economies of scale. Regional agreements like NAFTA can replace global free trade if they rely on traditional strengths, leading to market power. However, if blocks focus on economies of scale and knowledge-intensive sectors, they can complement global trade. External economies of scale encourage increased trade, reducing the need for tariffs and preventing inefficient trade diversion. Blocks organized around economies of scale can lead to more open international markets, with implications for EU and Americas free trade.