Free Trade Agreements Pros

This is why international trade rules established in free trade agreements (FTA) must be used strategically. Bilateral agreements strengthen trade between the two countries. They open markets to successful sectors. If companies take advantage of it, they create jobs. These agreements set the reduction and removal of tariffs for each type of product, which has a considerable impact on businesses. Free trade agreements should stimulate trade between two or more countries. The six main advantages of strengthening international trade are that free trade is a largely theoretical policy where governments impose absolutely no tariffs, taxes or tariffs on imports or export quotas. In this sense, free trade is the opposite of protectionism, a defensive trade policy designed to exclude the possibility of foreign competition. A bilateral trade agreement gives privileged trade status between two nations. By giving them access to each other`s markets, they increase trade and economic growth. The terms of the agreement harmonize commercial activity and a level playing field. Trade agreements open markets and provide incentives and protection for businesses. These include obligations to protect intellectual property and workers` rights, as well as to open up regions to competition.

They also regulate environmental standards and improve customs facilitation. Alan Blinder, a professor of economics at Princeton University, said, “Exporters tend to be more technologically demanding and create better jobs.” Trade and finance support each other. Finally, global investments allow for greater diversification and risk sharing. An internal market actually creates a level playing field for each member and includes not only tradable goods and products, but also allows citizens of each Member State to work freely throughout the region. The Transatlantic Trade and Investment Partnership would remove existing barriers to trade between the United States and the European Union. This would be the largest agreement ever reached by the North American Free Trade Agreement. Negotiations were suspended after President Trump took office. Although the EU is made up of many Member States, it can negotiate as a unit.

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