This article examines the efficacy of regional trade agreements (RTAs) in promoting bilateral trade through a sociological lens that stresses institutional underpinnings of the market. Most RTAs are driven by economic neoliberalism and mainly focus on “negative integration” (direct removal of trade barriers such as tariffs and other regulations). Not all RTAs incorporate elements of “positive integration” (deliberate establishment of institutions supporting new markets). Using a large data set on international bilateral trade from 1958 through 2006, this study finds that incorporation of positive integration in an RTA increases its actual efficacy in promoting bilateral trade. It further distinguishes two major types of positive integration: (1) establishment of market institutions that directly regulate cross‐border markets and (2) establishment of social institutions that deal with social consequences of market expansion. Both types promote bilateral trade. The higher the level of positive integration, the more effective the RTA is in promoting bilateral trade. Overall, this study lends support to the sociological insight that creation of necessary institutions is essential for market expansion across borders. It also implies that positive integration has the potential to reconcile the seemingly contradictory goals of trade expansion and social protection.