Product Code Database
A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common trade agreements are of the preferential and free-trade area types, which are concluded in order to reduce (or eliminate) , Import quota and other trade barrier on items between the signatories.
The logic of formal trade agreements is that they outline what is agreed upon and specify the punishments for deviation from the rules set in the agreement. Trade agreements therefore make misunderstandings less likely, and create confidence on both sides that cheating will be punished; this increases the likelihood of long-term cooperation. An international organization, such as the IMF, can further incentivize cooperation by monitoring compliance with agreements and reporting third countries of the violations. Monitoring by international agencies may be needed to detect non-tariff barriers, which are disguised attempts at creating trade barriers.
Trade pacts are frequently politically contentious, as they might pit the winners and losers of an agreement against each other. Aside from their provisions on reducing tariffs, contentious issues in modern free trade agreements may revolve around Standardization on issues such as intellectual property regulations, labour rights, and environmental and safety regulations. Increasing efficiency and economic gains through free trade is a common goal.
The anti-globalization movement opposes trade agreements almost by definition, although some groups normally allied within that movement, such as leftist parties, might support fair trade or safe trade provisions that moderate real and perceived ill effects of globalization. In response to criticism, free trade agreements have increasingly over time come with measures that seek to reduce the negative externalities of trade liberalization.
The second type is a bilateral trade agreement, when signed by two parties, where each party may be a country (or other customs territory), a trade bloc or an informal group of countries (or other customs territories). Both countries loosen their trade restrictions to help businesses, so that they can prosper better between the different countries. This definitely helps lower taxes and it helps them converse about their trade status. Usually, this revolves around subsided domestic industries. Mainly the industries fall under automotive, oil, or food industries.
A trade agreement signed between more than two sides (typically neighboring or in the same region) is classified as multilateral. These face the most obstacles- when negotiating substance, and for implementation. The more countries that are involved, the harder it is to reach mutual satisfaction. Once this type of trade agreement is settled on, it becomes a very powerful agreement. The larger the GDP of the signatories, the greater the impact on other global trade relationships. The largest multilateral trade agreement is the North American Free Trade Agreement, involving the United States, Canada, and Mexico.
The North American Free Trade Agreement (NAFTA) was established on January 1, 1989, between the United States, Canada, and Mexico. This agreement was designed to reduce tariff barriers in North America.
/ref>
The Association of Southeast Asian Nations (ASEAN) was formed in 1967 between the countries of Indonesia, Malaysia, the Philippines, Singapore, and Thailand. It was established to promote political partnership and maintain economic stability throughout the region.
In the framework of the World Trade Organization, different agreement types are concluded (mostly during new member accessions), whose terms apply to all WTO members on the so-called most-favored basis (MFN), which means that beneficial terms agreed bilaterally with one trading partner will apply also to the rest of the WTO members.
All agreements concluded outside of the WTO framework (and granting additional benefits beyond the WTO MFN level, but applicable only between the signatories and not to the rest of the WTO members) are called preferential by the WTO. According to WTO rules, these agreements are subject to certain requirements such as notification to the WTO and general reciprocity (the preferences should apply equally to each of the signatories of the agreement) where unilateral preferences (some of the signatories gain preferential access to the market of the other signatories, without lowering their own tariffs) are allowed only under exceptional circumstances and as temporary measure.The European Union got a WTO waiver to grant favourable access to its market for the ACP states, without requiring that in return they open their markets to competition from the EU. The WTO waiver already expired and currently the EU and the ACP states are negotiating WTO compliant reciprocial agreements).
The trade agreements called preferential by the WTO are also known as regional (RTA), despite not necessarily concluded by countries within a certain region. There are currently 205 agreements in force as of July 2007. Over 300 have been reported to the WTO. The number of FTA has increased significantly over the last decade. Between 1948 and 1994, the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO, received 124 notifications. Since 1995 over 300 trade agreements have been enacted.
The WTO is further classifying these agreements in the following types:
Lists:
|
|
