08 Apr Advantages And Disadvantages Of Regional Trade Agreements
The pros and cons of free trade agreements affect employment, business growth and living standards: trade agreements open many doors for businesses. With access to new markets, competition intensifies. Increasing competition is forcing companies to produce better quality products. It also leads to greater diversity for consumers. If there are a variety of high quality products, companies can improve customer satisfaction. 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.
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 free trade area deals with the abolition of tariffs and trade measures applied to Member States. This means that there are no common policies that apply to all members and that each country in the free trade area imposes its own tariffs and quotas. The main criticism of free trade agreements is that they are responsible for outsourcing employment. In total, there are seven drawbacks: the outsourcing of jobs in developing countries can become a trend with a free trade area. Due to the lack of health and safety legislation in many countries, workers may be forced to work in unsanitary and below-average work environments. Regional trade agreements refer 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. If there is free trade and tariffs and quotas are abolished, monopolies will also be abolished because more players will be able to enter the market and join the market. Using the term `regional`, it should be remembered that trade agreements are international – member states of a trade pact do not need to be in a neighbouring country. As a result, regional trade agreements can cover large geographic areas. Get the GED on a highly controversial regional trade agreement being negotiated, the RCEP, and learn more about global economic dynamics by signing our newsletter today.