International Trade Agreement

Trade agreements are when two or more nations agree on the terms of trade between them.
They determine the tariffs and duties that countries impose on imports and exports. All trade
agreements affect international trade.

Types of trade agreements:

1. Unilateral Trade Agreements

A unilateral trade agreement is a commerce treaty that a nation imposes without regard to
others. It benefits that one country only. It is unilateral because other nations have no choice in
the matter. It is not open to negotiation.The World Trade Organization defines a unilateral
trade preference similarly. It occurs when one nation adopts a trade policy that isn't
reciprocated. For example, it happens when a country imposes a trade restriction, such as a
tariff, on all imports.

It also applies to a state that lifts a tariff on its partner's imports even that's not reciprocated. A
large country might do that to help out a small one.

A unilateral agreement is one type of free trade agreement. Another type is a bilateral
agreement between two countries. It is the most common because it's easy to negotiate. The
third type is a multilateral agreement. It's the most powerful but takes a long time to negotiate.

Some conservatives define unilateral trade policies as the absence of any trade agreement
whatsoever. In that definition, the United States would lift all tariffs, regulations, and other
restrictions on trade. It's unilateral because it doesn't require other nations to do the same. The
argument is that the government should not restrict the rights of its citizens to trade anywhere
in the world.

that scenario, other countries would keep their tariffs on U.S. exports. That would give them a
unilateral advantage. They could ship cheap goods into the United States, but U.S. exports
would be priced higher in their countries. Emerging market nations are afraid of any trade
agreements with developed nations. They worry that the imbalance of power would create a
unilateral benefit to the developed nation.
2. Bilateral Trade Agreements.
Bilateral trade agreements are between two countries. Both countries agree to loosen trade
restrictions to expand business opportunities between them. They lower tariffs and confer
preferred trade status with each other. The sticking point usually centers around key protected
or subsidized domestic industries. For most countries, these are in the automotive, oil or food
production industries.was the Transatlantic Trade and Investment Partnership with the
European Union.Each agreement covers five areas. First, it eliminates tariffs and other trade
taxes. This gives companies within both countries a price advantage. It works best when each
country specializes in different industries.

Second, countries agree they won't dump products at a cheap cost. Their companies do this to
gain unfair market share. They drop prices below what it would sell for at home or even its cost
to produce. They raise prices once they've destroyed competitors.

Third, the governments refrain from using unfair subsidies. Many countries subsidize strategic
industries, such as energy and agriculture. This lowers the costs for those producers. It gives
them an unfair advantage when exporting to another nation.

Fourth, the agreement standardizes regulations, labor standards, and environmental

protections. Fewer regulations act like a subsidy. It gives the country's exporters a competitive
advantage over its foreign competitors.Fifth, they agree to not steal the other's innovative
products. They adopt each other's copyright and intellectual property laws.

3. Multilateral (or Regional) Agreements

Multilateral trade agreements are commerce treaties between three or more nations. The
agreements reduce tariffs and make it easier for businesses to import and export. Since they
are among many countries, they are difficult to negotiate. They set rules of trade between
several countries. Multilateral agreements shape international trade unions, such as WTO, EU,
NAFTA, etc. For example, WTO is regulated by General Agreement on Trade and Tariffs.
European Union is regulated by several treaties, such as Treaty of Rome, Treaty of Maastricht,
etc.That same broad scope makes them more robust than other types of trade agreements
once all parties sign. Bilateral agreements are easier to negotiate but these are only between
two countries.They don't have as big an impact on economic growth as does a multilateral
agreement.
East African Community
The East African Community (EAC) is an intergovernmental organization composed of six
countries in the African Great Lakes region in eastern Africa: Burundi, Kenya, Rwanda, South
Sudan, Tanzania, and Uganda. Paul Kagame, the president of Rwanda, is the EAC's chairman.
The organisation was founded in 1967, collapsed in 1977, and was revived on 7 July 2000.In
2008, after negotiations with the Southern African Development Community (SADC) and the
Common Market for Eastern and Southern Africa (COMESA), the EAC agreed to an expanded
free trade area including the member states of all three organizations. The EAC is an integral
part of the African Economic Community.The EAC is a potential precursor to the establishment
of the East African Federation, a proposed federation of its members into a single sovereign
state. In 2010, the EAC launched its own common market for goods, labour, and capital within
the region, with the goal of creating a common currency and eventually a full political
federation.In 2013, a protocol was signed outlining their plans for launching a monetary union
within 10 years. In September 2018 a committee was formed to begin the process of drafting a
regional constitution.

Plans
The new treaty was proposed with plans drawn up in 2004 to introduce a monetary union with
a common currency, the East African shilling, some time between 2012 and 2015. There were
also plans for a political union, the East African Federation, with a common President (initially
on a rotation basis) and a common parliament by 2010. However, some experts like those
based out of the public think tank Kenya Institute of Public Policy Research and Analysis
(KIPPRA), noted that the plans were too ambitious to be met by 2010 because a number of
political, social and economic challenges are yet to be addressed. The proposal was the subject
of National Consultative discussions, and a final decision was to be taken by the EAC Heads of
State in mid-2007. In 2013 a protocol was signed outlining their plans for launching a monetary
union within 10 years.

In September 2018 a committee was formed to begin the process of drafting a regional
constitution.
Eurasian Economic Union
The Eurasian Economic Union (EAEU) is an economic union of states located in central and
northern Asia and Eastern Europe. The Treaty on the Eurasian Economic Union was signed on
29 May 2014 by the leaders of Belarus, Kazakhstan and Russia, and came into force on 1
January 2015.Treaties aiming for Armenia's and Kyrgyzstan's accession to the Eurasian
Economic Union were signed on 9 October and 23 December 2014, respectively. Armenia's
accession treaty came into force on 2 January 2015. Kyrgyzstan's accession treaty came into
effect on 6 August 2015.It participated in the EAEU from the day of its establishment as an
acceding state.

The Eurasian Economic Union has an integrated single market of 183 million people and a gross
domestic product of over 4 trillion U.S. dollars (PPP).The EAEU introduces the free movement of
goods, capital, services and people and provides for common policies in the macroeconomic
sphere, transport, industry and agriculture, energy, foreign trade and investment, customs,
technical regulation, competition and antitrust regulation. Provisions for a single currency and
greater integration are envisioned in future. The union operates through supranational and
intergovernmental institutions. The Supreme Eurasian Economic Council is the supreme body of
the Union, consisting of the Heads of the Member States. The second level of
intergovernmental institutions is represented by the Eurasian Intergovernmental Council
(consisting of the Heads of the governments of member states). The day-to-day work of the
EAEU is done through the Eurasian Economic Commission, the executive body of the Union.
There is also a judicial body – the Court of the EAEU.

European Free Trade Association

The European Free Trade Association (EFTA) is a regional trade organization and free trade area
consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland. The
organization operates in parallel with the European Union (EU), and all four member states
participate in the European Single Market and are part of the Schengen Area.They are not,
however, party to the European Union Customs Union.EFTA was historically one of the two
dominant western European trade blocs, but is now much smaller and closely associated with
its historical competitor, the European Union. It was established on 3 May 1960 to serve as an
alternative trade bloc for those European states that were unable or unwilling to join the then
European Economic Community (EEC), which subsequently became the European Union. The
Stockholm Convention, to establish the EFTA, was signed on 4 January 1960 in the Swedish
capital by seven countries (known as the "outer seven").
Since 1995, only two founding members remain, namely Norway and Switzerland. The other
five, Austria, Denmark, Portugal, Sweden and the United Kingdom, have joined the EU in the
intervening years. The initial Stockholm Convention was superseded by the Vaduz Convention,
which aimed to provide a successful framework for continuing the expansion and liberalization
of trade, both among the organization's member states and with the rest of the world.

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA; Spanish: Tratado de Libre Comercio de
América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is an
agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in
North America. The agreement came into force on January 1, 1994.] It superseded the 1988
Canada–United States Free Trade Agreement between the United States and Canada,and is
expected to be replaced by the United States–Mexico–Canada Agreement once it is ratified.

NAFTA has two supplements: the North American Agreement on Environmental Cooperation
(NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

Most economic analyses indicate that NAFTA has been beneficial to the North American
economies and the average citizen, but harmed a small minority of workers in industries
exposed to trade competition. Economists hold that withdrawing from NAFTA or renegotiating
NAFTA in a way that reestablishes trade barriers will adversely affect the U.S. economy and cost
jobs. However, Mexico would be much more severely affected by job loss and reduction of
economic growth in both the short term and long term.

On September 30, 2018, it was announced that the United States, Mexico, and Canada had
come to an agreement to replace NAFTA with the United States–Mexico–Canada Agreement
(USMCA). The USMCA is the result of the renegotiation of NAFTA that the member states
undertook from 2017 to 2018, though NAFTA will remain in force until the USMCA is ratified by
its members.
Regional Economic Integration
Regional Economic Integration can best be defined as an agreement between groups of
countries in a geographic region, to reduce and ultimately remove tariff and non-tariff barriers
to the free flow of goods,services, and factors of production between each other.

Regional Economic Integration can best be defined as an agreement between groups

of countries in a geographic region, to reduce and ultimately remove tariff and non-tariff

barriers to the free flow of goods, services, and factors of production between each other.

The following are examples of Regional Economic Integration:

• NAFTA (North American Free Trade Agreement)-An agreement among the

U.S.A., Canada, and Mexico.

• EU (European Union)-A trade agreement with 15 European countries.

• APEC (Asian Pacific Economic Cooperation Forum) - This includes NAFT A

members, Japan, and China.

We are going to focus our discussion of regional economic integration on the

European Union. The European Community was formed in 1952; it has now become the

framework for the present European Union. The European Union is a trade agreement

between 15 European countries. The Maastricht Treaty was signed in 1992. From this

treaty, a single market was formed on January 151, 1993. As the EU moves toward a closer

economic union and a further enlargement, they plan on instituting a single currency called

the Euro. With the promise of ultimately removing barriers and creating a free flow of

goods between the European countries, the integration will create new opportunities and

should show a substantial net gain from regional free trade agreements.