Recent International Trade Agreements

Despite the potential tensions between the two approaches, it appears that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy. However, both the WTO and agreements such as NAFTA are controversial among groups such as alter-globalists, who argue that such agreements serve the interests of multinationals and not workers, while free trade was a proven method of improving economic performance and increasing overall income. To counter this opposition, pressure has been exerted for labour and environmental standards to be included in these trade agreements. Labour standards contain provisions relating to the minimum wage and working conditions, while environmental standards would prevent trade if there were fears of environmental damage. As a result, many countries have shifted from the multilateral process to bilateral or regional trade agreements. Such an agreement is the North American Free Trade Agreement (NAFTA), which came into force in January 1994. Under NAFTA, the United States, Canada and Mexico agreed to eliminate all tariffs on merchandise trade and reduce restrictions on trade in services and foreign investment for more than a decade. The United States also has bilateral agreements with Israel, Jordan, Singapore and Australia and negotiates bilateral or regional trade agreements with countries in Latin America, Asia and the Pacific. The European Union also has free trade agreements with other countries around the world. Improving market access for the poorest developing countries would give them the means to use trade for development and the fight against poverty. Giving the poorest countries duty-free and quota-free access to global markets would have little cost to the rest of the world.

Recent market opening initiatives in the EU and some other countries are important in this regard.10 To be absolutely effective, this access should be sustainable, extended to all products and accompanied by simple and transparent rules of origin. This would give the poorest countries the confidence to stick to difficult internal reforms and ensure effective use of debt relief and aid flows. While virtually all economists believe that free trade is desirable, they do not agree on the best way to move from tariffs and quotas to free trade. The three fundamental approaches to trade reform are one-sided, multilateral and bilateral. As part of the free trade agreement between Hong Kong, China and Georgia, the parties to the agreement, which came into force on February 13, 2019, highlighted the benefits it has brought to trade and investment in both sides. Georgia has abolished tariffs on 96.6% of its tariffs on imports from Hong Kong, China, while Hong Kong and China have linked its tariff regime. In addition, the World Trade Organization (WTO) is a Geneva-based global organization that deals with trade between nations. The WTO, established in January 1995 by the GATT negotiations in Uruguay, had 144 nations as of January 2002.