International Trade Agreements

One of the motivations for these standards is the fear that unrestricted trade will lead to a “race to the bottom” in labour and environmental standards, as multinationals around the world seek low wages and lax environmental legislation to reduce costs. Yet there is no empirical evidence of such a race. In fact, trade generally involves the transfer of technology to developing countries, which allows for an increase in wage rates, as the Korean economy – among many others – has demonstrated since the 1960s. In addition, increased revenues allow cleaner production technologies to become affordable. Replacing scooters made on Indian territory in India with scooters imported from Japan, for example, would improve air quality in India. Free trade allows the total import and export of goods and services between two or more countries. Trade agreements are forged to reduce or eliminate import or export quotas. These help participating countries to act competitively. As a result, many countries have shifted from the multilateral process to bilateral or regional trade agreements. Such an agreement is the North American Free Trade Agreement (NAFTA), which came into force in January 1994. Under NAFTA, the United States, Canada and Mexico agreed to eliminate all tariffs on merchandise trade and reduce restrictions on trade in services and foreign investment for more than a decade.

The United States also has bilateral agreements with Israel, Jordan, Singapore and Australia and negotiates bilateral or regional trade agreements with countries in Latin America, Asia and the Pacific. The European Union also has free trade agreements with other countries around the world. The advantage of these bilateral or regional agreements is to promote stronger trade between the parties to the agreement. They can also accelerate global trade liberalization when multilateral negotiations find themselves in trouble. Reluctant countries that are excluded from bilateral agreements and therefore do not participate in the increase in trade they involve may then be tasked with joining accession and removing their own trade barriers. Proponents of these agreements have called the process “competitive liberalization,” in which countries are challenged to reduce trade barriers in order to stay in touch with other countries. Thus, shortly after nafta was implemented, the EU sought and finally signed a free trade agreement with Mexico to ensure that European products were not at a competitive disadvantage in the Mexican market as a result of NAFTA. raise awareness among the negotiating team and other government agencies, the private sector and science, as well as key policy makers, including parliamentarians on the GATT and WTO agreements, the accession process, the obligations and benefits of WTO membership. UNCTAD`s membership assistance aims to enable candidate countries to better define their trade objectives and integrate them effectively into their development plans, promote their interests in international trade negotiations, monitor and enforce international regulatory practices, develop and sequence international regulatory practices, and exploit trade opportunities offered by the multilateral trading system.

Despite the potential tensions between the two approaches, it appears that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy.