In recent years, the Cato Institute’s Center for Trade Policy Studies has endorsed (pdf) the Bush administration’s “competitive liberalization” strategy:

Free-trade agreements deviate from the multilateral principle of nondiscrimination, and they can divert trade from
more efficient to less efficient but favored import producers. But under the right conditions, FTAs can inject new competition into our domestic economy, lowering prices for consumers and shifting factors of production to more efficient uses, while leveling the playing field for U.S. exporters.

“The possibility of trade diversion is not sufficient reason to reject the Bush administration’s policy of pursuing FTAs,” wrote Dan Griswold in 2003. But these days, Sallie James, who just joined CTPS in 2006, is sounding warnings about bilateral agreements:

Bilateral trade agreements between an economic power and a small economy country — such as the U.S.-Oman trade deal currently before Congress — are not of great concern. They don’t create much distortion in the world market, said James.
But if economic powers start making two-country deals with each other — specifically blocking out other countries and ignoring trade liberalization — serious repercussions could emerge.
“God help us all if the U.S. and Japan start doing bilateral agreements,” James said, “That will be a serious problem for the world economy.”

This might signal an increased sensitivity at Cato to the distortions induced by PTAs, or merely the likelihood of an increased ratio of trade diversion to trade creation in some of the trade deals that the US may pursue.