I've always figured that there must have been some kind of balance brought about by that treaty. Perhaps the advantage is in production capability. The Federation being made up of so many member worlds may be able to produce say 5 ships to every one Romulan one. So the Romulan ship may in battle be able to take out multiple ships in battle due to it's advantage with the cloaking device, but that advantage is counterbalanced by the Federation's production ability. Treaties without balance of this type tend not to last long, unless one side is so much stronger than the other that it can simply impose it's will.
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