Global Trade Agreements Examples

For many countries, unilateral reforms are the only effective way to reduce barriers to internal trade. However, multilateral and bilateral approaches – removing trade barriers in coordination with other countries – have two advantages over unilateral approaches. First, the economic benefits of international trade will be strengthened and strengthened if many countries or regions agree to remove trade barriers. By expanding markets, concerted trade liberalization enhances competition and specialization between countries, increasing efficiency and consumer incomes. In recent years, the WTO has also made it a priority to help developing countries, which are covered by the WTO regulation. Many developing and emerging countries lack the technical experience and know-how to manage large and comprehensive trade agreements. The WTO provides them with critical training and support, ensuring that the WTO is comprehensive and fair to both the richest countries and the world`s poorest countries. The world`s major countries introduced the GATT in response to the waves of protectionism that paralyzed and contributed to world trade during the Great Depression of the 1930s. Successive GATT “cycles” have significantly reduced customs barriers on industrial products in industrialized countries. Since the beginning of the GATT in 1947, the average tariffs set by industrialized countries have increased from about 40% to about 5% today. These tariff reductions helped to promote both the considerable expansion of world trade after the Second World War and the resulting increase in real per capita income between developed and developing countries.

The annual benefit of the elimination of tariff and non-tariff barriers resulting from the Uruguay Round agreement (negotiated between 1986 and 1993 under the aegis of GATT) was estimated at about $96 billion, or 0.4% of global GDP. Discussions have recently been announced on a new transatlantic trade agreement between the United States and the European Union. The agreement would reduce barriers to trade in goods and services worth more than half a trillion euros already circulating between the two regions. Supporters of the free trade agreement say it will help strengthen both economies by facilitating the supply of U.S. government contracts for EU businesses and freeing up investment capital for small and medium-sized enterprises.