Gatt also allows free trade areas (FTAs), such as the European Free Trade Association, which is mainly made up of Scandinavian countries. Members of free trade agreements eliminate tariffs on trade with each other, but retain autonomy in setting their tariffs with non-members. Afghanistan has concluded bilateral agreements with the following countries and blocs:[1] The advantage of such bilateral or regional agreements is that they promote greater trade between the parties to the agreement. They can also accelerate the liberalization of world trade when multilateral negotiations run into difficulties. Recalcitrant countries that are excluded from bilateral agreements and therefore do not participate in the resulting increase in trade may then be encouraged to join them and remove their own barriers to trade. Proponents of these agreements have called this process „competitive liberalization,” which calls on countries to remove trade barriers to keep pace with other countries. For example, shortly after the implementation of NAFTA, the EU sought a free trade agreement with Mexico to ensure that European products in the Mexican market were not competitively disadvantaged by NAFTA. However, these advantages must be weighed against one drawback: 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. This is a list of free trade agreements between two parties, where each party could be a country (or other customs territory), a trading bloc or an informal group of countries. The North American Free Trade Agreement (NAFTA) was implemented to promote trade between the United States, Canada and Mexico. The agreement, which eliminated most tariffs on trade between the three countries, entered into force on 1 January 1994. Many tariffs, notably on agriculture, textiles and automobiles, were phased out between 1 January 1994 and 1 January 2008.
As a multilateral trade agreement, GATT requires its signatories to extend most-favoured-nation status to other trading partners participating in the WTO. Most-favoured-nation status means that each WTO Member enjoys the same tariff treatment for its products in foreign markets as the „most favoured country” competing in the same market, thus excluding preferences or discrimination against a member State. Despite the potential tensions between the two approaches, it appears that multilateral and bilateral/regional trade agreements will remain hallmarks of the global economy. However, the WTO and agreements such as NAFTA have become controversial among groups such as anti-globalization protesters, arguing that such agreements serve the interests of multinationals rather than those of workers, even though trade liberalization has been a proven method of improving economic performance and increasing overall revenues. To address this opposition, pressure has been exerted to include labour and environmental standards in these trade agreements. Labour standards include provisions on minimum wages and working conditions, while environmental standards would prevent trade if environmental damage were feared. While free trade offers overall benefits, the removal of a barrier to trade for a particular good harms the shareholders and employees of the domestic industry that produces that good. Some of the groups affected by foreign competition have sufficient political power to obtain protection against imports. Therefore, despite their considerable economic costs, barriers to trade remain. According to the U.S. International Trade Commission, for example, U.S. profits from the lifting of trade restrictions on textiles and clothing would have been nearly twelve billion dollars in 2002 alone.
This is a net economic gain after deduction of losses for businesses and employees in domestic industry. Nevertheless, domestic textile producers managed to convince Congress to maintain strict import restrictions. 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 obtain wto authorization to impose higher tariffs (i.e., `Retaliatory measures`) on goods from the Member State concerned if it does not comply. The legislation was drafted under President George H. W.
Bush as the first phase of his Enterprise for the Americas initiative. The Clinton administration, which signed NAFTA in 1993, believed it would create 200,000 jobs in the United States within two years and 1 million within five years, as exports play an important role in U.S. economic growth. The government expected a dramatic increase in U.S. imports from Mexico due to lower tariffs. One of the motivations for these standards is the fear that unfettered trade will lead to a „race to the bottom” of labour and environmental standards, as multinationals travel the world in search of low wages and lax environmental regulations to cut costs. However, there is no empirical evidence of such a breed. In fact, trade usually involves technology transfer to developing countries, which can raise wage rates, as the Korean economy – among many others – has shown since the 1960s. In addition, increased revenues are allowing cleaner production technologies to become affordable. Replacing scooters produced locally in India with scooters imported from Japan, for example, would improve air quality in India. U.S. free trade agreements typically deal with a variety of government activities.
One example is the reduction or elimination of tariffs imposed on all eligible products from the other country. For example, a country that normally imposes a tariff of 5% of the value of the incoming good will abolish that duty on products originating (as defined in the FTA) in the United States. The United States has 14 free trade agreements with 20 countries and is currently negotiating regional free trade agreements with several others. President Donald Trump promised during the election campaign to repeal NAFTA and other trade agreements that he considered unfair to the United States. On August 27, 2018, he announced a new trade agreement with Mexico to replace him. The U.S.-Mexico trade agreement, as it was called, would maintain duty-free access for agricultural products on both sides of the border and remove non-tariff barriers to trade, while further promoting agricultural trade between Mexico and the United States and effectively replacing NAFTA. Documenting a product`s origin or compliance with the rules of origin can make using the tariffs negotiated with the free trade agreement a little more complicated. However, these rules help ensure that U.S.
exports, not exports from other countries, benefit from the agreement. An interactive list of bilateral and multilateral free trade instruments is available on the TREND Analytics website. [59] Would you like to make your first export sale or expand into new markets? Start by seizing opportunities with U.S. Free Trade Agreement (FTA) partner countries. These countries offer, inter alia, better market access through the reduction or elimination of tariffs, the protection of intellectual property and the elimination of non-tariff barriers. Access to FTA markets can make it easier and cheaper for your business and give your product a competitive edge over products from other countries. Criticisms of bilateral and regional approaches to trade liberalization have many additional arguments. They suggest that these approaches could undermine and replace the WTO`s multilateral approach, rather than supporting and complementing it, which is preferable for non-discriminatory global activity.
Therefore, the long-term outcome of bilateralism could be a deterioration of the global trading system into competing and discriminatory regional trading blocs, resulting in additional complexity that would complicate the flow of goods between countries. Moreover, the reform of issues such as agricultural export subsidies cannot be effectively addressed at the bilateral or regional level. For many countries, unilateral reforms are the only effective way to reduce barriers to internal trade. However, multilateral and bilateral approaches – the removal of trade barriers in coordination with other countries – have two advantages over unilateral approaches. .
