Important Free Trade Agreements
In total, the United States currently has 14 trade agreements involving 20 different countries. Second, the multilateral removal of trade barriers could reduce political opposition to free trade in each of the countries concerned. This is because groups that would otherwise oppose or be indifferent to trade reforms could join the campaign for free trade if they see opportunities in the trade deal for export to other countries. Therefore, free trade agreements between countries or regions are a useful strategy for liberalizing world trade. Since Adam Smith published The Wealth of Nations in 1776, the vast majority of economists have accepted the thesis that free trade between nations improves overall economic well-being. Free trade, generally defined as the absence of tariffs, quotas, or other governmental barriers to international trade, allows each country to specialize in goods that it can produce cheaply and efficiently compared to other countries. Such specialization allows all countries to obtain higher real incomes. However, these advantages must be offset by a disadvantage: by excluding certain countries, these agreements can shift the composition of trade from low-wage countries that are not parties to the agreement to high-cost countries that are. Although the WTO enshrines the principle of non-discrimination in international trade, Article 24 of the GATT allows for the formation of free trade areas and “customs unions” among WTO Members.
A free trade area is a group of countries that eliminate all tariffs on trade between them, but retain autonomy in setting their tariffs with non-members. A customs union is a group of countries that eliminate all tariffs on trade between them, but maintain a common external tariff on trade with countries outside the Union (and therefore technically violate the most-favoured-nation regime). FAS cooperates with other US partners. Government agencies and the private sector should not only negotiate new trade agreements that benefit U.S. agriculture, but also hold our trading partners accountable for their commitments under existing free trade agreements. The customs union exception was partly designed to take account of the creation of the European Economic Community (EC) in 1958. The EC, which originally consisted of six European countries, is now known as the European Union (EU) and comprises twenty-seven European countries. The EU has gone beyond simply removing barriers to trade between Member States and forming a customs union. It has moved towards even greater economic integration by becoming a common market – an agreement that removes obstacles to the mobility of factors of production such as capital and labour between participating countries. As a common market, the EU also coordinates and harmonises the fiscal, industrial and agricultural policies of each country. In addition, many EU members have formed a single currency area by replacing their national currency with the euro. As I wrote in the Trans-Pacific Partnership article, globalization is no longer a matter of “when it happens”; it is already there.
We live in a time when trade and commerce are more interconnected than ever. I think we are well beyond the point of discussing whether globalisation is a good thing or not. Globalization is already underway. We are now in the process of determining who will set the rules of globalization and what those rules will be. The United States` continued participation in and support for free trade agreements will not only help businesses of all sizes, but also protect workers` rights and the environment in member countries. The WTO also mediates disputes between member countries over trade issues. When the government of one country accuses the government of another country of violating world trade rules, a WTO panel rules on the dispute. (The panel`s decision may be appealed to an Appellate Body.) If the WTO finds that the government of a member country has not complied with the agreements it has signed, the Member is required to change its policy and bring it into line with the rules. If the member finds it politically impossible to change its policy, it may offer other countries compensation in the form of lower trade barriers for other goods.
If it chooses not to do so, other countries may be allowed by the WTO to impose higher tariffs (i.e. “retaliatory measures”) on goods from the member country concerned for failing to comply with them. On the other hand, some domestic industries benefit from it. They find new markets for their duty-free products. These industries are growing and hiring more workers. Currently, the United States has 14 free trade agreements with 20 countries. FTAs can help your business enter the global market more easily and compete through zero or reduced tariffs and other regulations. Although the specificities of free trade agreements vary, they generally provide for the removal of barriers to trade and the creation of a more stable and transparent trade and investment environment.
This makes it easier and cheaper for U.S. companies to export their products and services to trading partner markets. While virtually all economists consider free trade to be desirable, they differ as to how best to move from tariffs and quotas to free trade. The three fundamental approaches to trade reform are unilateral, multilateral and bilateral. The failure of Doha has allowed China to gain a foothold in world trade. It has signed bilateral trade agreements with dozens of countries in Africa, Asia and Latin America. Chinese companies have the right to develop the country`s oil and other raw materials. In return, China provides loans and technical or commercial support. Some countries, such as Britain in the nineteenth century and Chile and China in recent decades, have made unilateral tariff cuts – reductions made independently and without opposing measures taken by other countries. The advantage of unilateral free trade is that a country can immediately reap the benefits of free trade. Countries that dismantle trade barriers themselves do not have to postpone their reforms while trying to convince other countries to do the same. The benefits of such trade liberalization are considerable: several studies have shown that incomes rise faster in countries open to international trade than in countries more closed to trade.
Dramatic examples of this phenomenon are China`s rapid growth after 1978 and India`s growth after 1991, the data that indicate when major trade reforms took place. One prediction is that international trade agreements will continue to be controversial. Selling to U.S. Free Trade Agreement (FTA) partner countries can help your business more easily enter the global marketplace and compete by reducing trade barriers. U.S. free trade agreements deal with a variety of foreign government activities that affect your business: reduced tariffs, enhanced intellectual property protection, larger U.S. size…