Agreements Among Nations

A certain prognosis is that international trade agreements will continue to be controversial. Customs unions are agreements between countries for which the parties agree to allow free trade in products within the customs union and agree on a common external law (TEC) on imports from the rest of the world. It is this TEC that distinguishes a customs union from a regional trade agreement. It is important to note that, although trade within the Union is comprehensive, customs unions do not allow the free movement of capital and labour between Member States. The customs union of Russia, Belarus and Kazakhstan, founded in 2010, is an example of this. These countries have eliminated trade barriers between them, but have also agreed on certain common policies on relations with third countries. One of the difficulties of the WTO system has been the problem of maintaining and expanding the liberal system of world trade in recent years. Multilateral negotiations on trade liberalization are progressing very slowly and the demand for consensus among the many WTO members limits the extent to which trade reform agreements can go. As Mike Moore, a recent director-general of the WTO, said, the organization is like a car with an accelerator pedal and 140 handbrakes.

While multilateral efforts have been successful in reducing tariffs on industrial goods, they have been much less successful in liberalizing trade in the agricultural, textile and clothing sectors, as well as in other sectors of international trade. Recent negotiations, such as the Doha Development Round, have encountered problems and their ultimate success is uncertain. Some countries, such as Britain in the nineteenth century and Chile and China in recent decades, have made unilateral tariff cuts – reductions made independently and without any reciprocal action by other countries. The advantage of unilateral free trade is that a country can immediately reap the benefits of free trade. Countries that remove trade barriers themselves do not need to postpone reforms as they try to convince other nations to follow suit. The benefits of such trade liberalization are considerable: several studies have shown that incomes rise faster in countries open to international trade than in countries more closed to trade. Dramatic examples of this phenomenon are the rapid growth of China after 1978 and India after 1991, which indicate when major trade reforms took place. In 1995, GATT became the World Trade Organization (WTO), which today has more than 140 member countries. The WTO oversees four international trade agreements: GATT, the General Agreement on Trade in Services (GATS) and the Agreements on Trade-Related Intellectual Property Rights and Investment (TRIPS and TRIMS). The WTO is now the forum for members to negotiate the removal of trade barriers; the most recent forum is the Doha Development Round, launched in 2001. International agreements are formal agreements or commitments between two or more countries. An agreement between two countries is called “bilateral”, while an agreement between several countries is “multilateral”.

Countries bound by an international agreement are generally referred to as “States Parties”. The following video explains and compares the different types of trade agreements: in addition to treaties, there are other less formal international agreements. These include efforts such as the Proliferation Security Initiative (PSI) and the G7 Global Partnership Against the Spread of Mass Destruction. Although the PSI has a “Declaration of Prohibition Principles” and the G7 Global Partnership, several G7 leaders` declarations, neither has a legally binding document, which sets out specific commitments and is signed or ratified by member states. In the context of the Second World War, countries recognized that global cooperation was an important component of achieving all degrees of world peace – political, economic and social.

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