Trade Agreements And Alliances

Trade pacts are often politically controversial because they can change economic practices and deepen interdependence with trading partners. Improving efficiency through “free trade” is a common goal. Most governments support other trade agreements. The world has achieved almost more free trade in the next round, known as the Doha Round Trade Agreement. If successful, Doha would have reduced tariffs for all WTO members overall. In total, the United States currently has 14 trade agreements with 20 different countries. The United States has free trade agreements with 20 countries. These free trade agreements are based on the WTO agreement, with broader and stronger disciplines than those of the WTO. Many of our free trade agreements are bilateral agreements between two governments. But some, such as the North American Free Trade Agreement and the Dominican Republic-Central America-U.S. Free Trade Agreement, are multilateral agreements between several parties. As a multilateral trade agreement, GATT calls on its signatories to extend the status of the Most Preferred Nation (MFN) to other trading partners participating in the WTO.

MFN status means that each WTO member enjoys the same tariff treatment of its products in foreign markets as the “preferred” country that competes in the same market, thus excluding preferences or discrimination from a Member State. These agreements between three or more countries are the most difficult to negotiate. The larger the number of participants, the more difficult the negotiations. They are, by nature, more complex than bilateral agreements, insofar as each country has its own needs and requirements. 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. These occur when one country imposes trade restrictions and no other country responds.

A country can also unilaterally relax trade restrictions, but this rarely happens.