Why Do Countries Enter Into Trade Agreements

A trade agreement signed between more than two parties (usually in the neighbourhood or in the same region) is considered multilateral. They face the greatest obstacles – in the negotiation of the substance and in implementation. The more countries involved, the more difficult it is to achieve mutual satisfaction. Once this type of trade agreement is finalized, it becomes a very powerful agreement. The larger the GDP of the signatories, the greater the impact on other global trade relations. The most important multilateral trade agreement is the North American Free Trade Agreement[5] between the United States, Canada and Mexico. [6] The anti-globalization movement rejects such agreements almost by definition, but some groups that are generally allied within this movement, e.B. Green parties, strive for fair trade or trade regulations that mitigate the real and perceived negative effects of globalization. The WTO further classifies these agreements into the following types: there are a large number of trade agreements; where some are quite complex (European Union), while others are less intense (North American Free Trade Agreement). [8] The degree of economic integration that results depends on the specific nature of the trade pacts and policies adopted by the trading bloc: a trade agreement (also known as a trade pact) is a far-reaching fiscal, tariff and trade agreement that often includes investment guarantees. It is when two or more countries agree on conditions that help them trade with each other.

The most common trade agreements are preferential and free trade types that are concluded to reduce (or eliminate) tariffs, quotas and other trade restrictions on goods traded between signatories. As a general rule, the benefits and obligations of trade agreements apply only to their signatories. Trade agreements designated by the WTO as preferential are also called regional agreements (TACs), although they are not necessarily concluded by countries in a given region. As of July 2007, 205 agreements were currently in force. More than 300 have been notified to the WTO. [10] The number of free trade agreements has increased considerably over the past decade. Between 1948 and 1994, the General Agreement on Tariffs and Trade (GATT), the WTO`s predecessor, received 124 notifications. Since 1995, more than 300 trade agreements have been concluded.

[11] The global trading system has seen a rapid increase in the formation of regional trade agreements (RDRS), particularly after the WTO. Despite a large number of studies conducted by trade economists in this area, there are different views on the results of ART on world trade, as well as a lack of unanimity on the desirable mechanism for trade liberalization. The article examines various theoretical arguments and empirical explanations that support or reject RAs. A careful review of the studies identified the underlying conditions necessary for the successful functioning of art. Although regionalism is discriminatory in nature, it benefits from a preferred method of liberalizing trade between nations, as it provides immediate results for trade policy initiatives. The paper concludes that RAs should be carefully calibrated for proper functioning by identifying business partners and taking into account the interests of local stakeholders. .