Disadvantages Of Regional Trade Agreements

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Trade blocs, free trade zones and bilateral agreements are emerging in international trade. In 2001, regional trade agreements (RTA) accounted for 43% of world trade. The advent of RTAs has created greater diversity and complexity of both, creating a network in international trade relations. Member States benefit from trade agreements, including increased employment opportunities, lower unemployment rates and increased market opportunities. Since trade agreements generally come with investment guarantees, investors who wish to invest in developing countries are protected from political risks. Given that the pace of multilateral talks is generally slow (the Uruguay Round lasted seven years), which requires in-depth negotiations; In the meantime, countries that prefer multilateral trade liberalization are fighting for regionalization. Trade blocs are groups of countries that enter into trade agreements between them. Trade blocs may contain regional trade agreements relating to a treaty signed by two or more countries to promote the free movement of goods and services beyond the borders of its members. The agreement contains internal rules that Member States comply with each other.

As far as third countries are concerned, there are external rules to which members comply. The preferential trade agreement requires the least commitment to removing trade barriers Trade barriers are legal measures taken primarily to protect a country`s national economy. They generally reduce the amount of goods and services that can be imported. These barriers are put in place in the form of tariffs or taxes and, although Member States do not remove barriers between them. There are also no common trade barriers in preferential trade zones. Businesses in Member States benefit from increased incentives to trade in new markets as a result of the measures contained in the agreements. The fundamental premise of a regional trade agreement (RTA) is to facilitate trade and strengthen economic integration between states. Representatives of the regions concerned negotiate conditions through several stages, until all parties are satisfied. These conditions generally involve the removal or total removal of trade barriers that can hinder trade, such as tariffs and quotas. Once a regional trade agreement is ratified, the signatory states would pave the way for an increase in the movement of goods, services, people and capital between them. A common market is a kind of trade agreement in which members remove internal trade barriers, adopt common policies on relations with non-members and allow members to move their resources freely among themselves.

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