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Why Are Bilateral and Multilateral Trade Agreements Useful

Multilateral agreements are usually negotiated between countries that share a geographic region, and some of the most well-known regional agreements are the North American Free Trade Agreement (NAFTA) and the Central America-Dominican Republic Free Trade Agreement (CAFTA). However, multilateral agreements can also be international in nature, with perhaps the most successful international trade agreement being the General Agreement on Trade and Customs (GATT), which was negotiated between 153 countries after the end of the Second World War. The WTO Agreements recognize that RTAs can benefit countries as long as their objective is to facilitate trade between their parties. They also recognize that, in certain circumstances, these agreements could harm the commercial interests of other countries. Normally, the establishment of a customs union or free trade area would be contrary to the WTO principle of non-discrimination against all WTO Members (« most-favoured-nation treatment »). However, Article 24 of the General Agreement on Tariffs and Trade (GATT), Article 5 of the General Agreement on Trade in Services (GATS) and the enabling clause (paragraph 2(c)) allow WTO Members to conclude RTAs as a special exception provided that certain strict criteria are met. The EU has concluded or is negotiating such bilateral trade agreements with the following countries: the world`s major countries founded GATT in response to the waves of protectionism that crippled world trade during the Great Depression of the 1930s and contributed to its expansion. In successive rounds of negotiations, GATT has significantly reduced tariff barriers for industrial products in industrialized countries. Since the beginning of GATT in 1947, average tariffs in industrialized countries have risen from about 40% to about 5% today. These tariff reductions helped to promote the enormous expansion of world trade after the Second World War and the associated increase in real per capita income in both developed and developing countries. The annual gain from the elimination of tariff and non-tariff barriers resulting from the Uruguay Round Agreement (negotiated between 1986 and 1993 under the auspices of GATT) was estimated at about $96 billion, or 0.4 per cent of world GDP. Hufbauer argues that there is « no doubt » that the United States « would have been better off under the Trans-Pacific Partnership » than under a bilateral agreement with Japan.

« Trump is completely wrong to say that the TPP would have been a disaster, and I think he is completely wrong to think that he will get a better deal with this bilateral approach – but he will demand much more. He might get some countries to sign his « question » – but we`ll see how far he goes. Multilateral agreements also have their opponents. The reasons why these agreements do not offer lasting benefits are as follows: on 7 December 2013, WTO representatives approved the so-called Bali package. All countries agreed to streamline customs standards and reduce administrative burdens in order to accelerate trade flows. Food security is a problem. India wants to subsidize food so that it can be stored for distribution in case of famine. Other countries fear that India will dump cheap food on the world market in order to gain market share. Each agreement covers five areas. First, customs duties and other business taxes will be abolished. This gives companies in both countries a price advantage. It works best when each country specializes in different industries.

On behalf of the EU, the Commission negotiates and implements bilateral trade agreements with third countries. The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs is responsible for negotiating and implementing preferential trade regimes for processed agricultural products (PPPs). Criticisms of bilateral and regional approaches to trade liberalization have many additional arguments. They suggest that these approaches could undermine and replace the WTO`s multilateral approach, rather than supporting and complementing it, which is preferable for non-discriminatory global activity. Therefore, the long-term outcome of bilateralism could be a deterioration of the global trading system into competing and discriminatory regional trading blocs, resulting in additional complexity that would complicate the flow of goods between countries. Moreover, the reform of issues such as agricultural export subsidies cannot be effectively addressed at the bilateral or regional level. Similarly, Hufbauer argues that bilateral agreements also have a second major drawback: « The different [bilateral] agreements might contain slightly different provisions from each other, for example, for digital trade or for state-owned enterprises or otherwise. And so, ultimately, you end up with a more confusing set of agreements that companies have to deal with in relation to individual countries. In October 2014, the United States and Brazil settled a long-standing cotton dispute at the World Trade Organization (WTO). Brazil closed the case and waived its right to take countermeasures against U.S. trade or other proceedings in the dispute.

In 1995, GATT became the World Trade Organization (WTO), which today has more than 140 member countries. The WTO monitors four international trade agreements: GATT, the General Agreement on Trade in Services (GATS), and the Trade-Related Intellectual Property Rights and Investment Agreements (TRIPS and TRIMS, respectively). .