Dr Brian Grogan
International Trade Operations
22nd of November 2012
One of the most important trends in international trade is the dramatic increase of trade agreements between nations. A Trade agreement is when two or more nations create and agree to apply a specific set of terms and rules to follow when trading with one another. Trade agreements set specific rules and regulations on tariffs, taxes and duties on imports and exports for the nations involved. Trade agreements are created to benefit the countries involved and tend to be established to give the regional nations that are associated a competitive edge by decreasing or even eliminating tariffs and barriers to promote free movement of goods and services across national borders. A trade agreement only benefits countries that are members of the established trade bloc and tends to take away some trade from non-member countries.
There are two main types of trade agreements multi-lateral and bilateral trade agreements. A bilateral agreement involves only two countries that give one another favaoured tariffs and barriers that would benefit both nations. Bilateral trade agreements are relatively simply to create as there are only two national interests to protect. A multi-lateral trade agreement involves three or more nations and tends to be much more difficult to negotiate and thus establish due to many different points of view. However, once signed by all member states a multilateral trade agreement can prove to be very powerful. On paper the key advantages of trade agreements is that all nations are equally beneficial, however in reality some agreements tend to favour some members more than others. A great example is the North American Free Trade Agreement which benefits the United States of America more than Canada and Mexico.
Trade agreements are important...