Why Do Countries Enter Into Trade Agreements

The North American Free Trade Agreement (NAFTA) on January 1, 1989, when it came into force, was between the United States, Canada and Mexico that agreement was to remove customs barriers between the various countries. The global trading system has experienced rapid growth in regional trade agreements (ATRs), particularly after the WTO. Despite a large number of studies by trade economists in this area, there is differing views on the results of the RTA on world trade and there is no unanimity on the desirable mechanism for trade liberalization. The paper examines various theoretical arguments and empirical statements that support or reject ATTs. A thorough review of the studies identified the basic conditions necessary for the proper functioning of the ATR. Although regionalism is discriminatory in nature, it enjoys a preferred method of liberalizing trade between nations, as it yields immediate results for trade policy initiatives. The document concludes that they must be carefully calibrated for the proper functioning of the ATR, identifying trading partners and responding to the interests of local stakeholders. In addition, successful regional cooperation agreements should encourage multilateral initiatives. These are located between countries located in a given region. Among the most powerful are a few countries close in a geographical area. [7] These countries generally have similar hisisms, post-D demography and even economic goals. Trade agreements designated by the WTO as preferential agreements are also referred to as regional agreements (RTAs), although they are not necessarily concluded by countries within a given region.

Currently, 205 agreements are in effect as of July 2007. More than 300 people have been notified to the WTO. [10] The number of free trade agreements has increased significantly over the past decade. Between 1948 and 1994, the General Agreement on Tariffs and Trade (GATT), predecessor to the WTO, received 124 notifications. Since 1995, more than 300 trade agreements have been concluded. [11] The WTO continues to classify these agreements according to the following types: A trade agreement signed between more than two parties (usually neighbouring or in the same region) is considered multilateral. They face the main obstacles – to content negotiation and implementation. The more countries involved, the more difficult it is to achieve mutual satisfaction. Once this type of trade agreement is governed, it will become a very powerful agreement.