Free trade areas are formed by groups of countries that sign agreements to facilitate trade and reduce trade barriers. These agreements aim to increase economic growth, promote investment, and create jobs. Free trade areas are different from customs unions, which not only eliminate trade barriers but also establish a common external tariff on goods imported from non-member countries.
Free trade areas promote globalization by allowing member countries to specialize in the production of goods and services that they have a comparative advantage in. This results in increased efficiency, lower prices, and greater consumer choice. However, free trade areas can also lead to job losses in some industries that are unable to compete with cheaper imports.
Harvard's Jeff Frieden writes that understanding political economy can be a powerful tool for those interested in changing governments and societies. Political economy examines the relationship between political and economic processes and how they shape each other. Free trade areas are a product of political negotiations and can have significant political implications.
Section 301 of the Trade Act of 1974 gives the U.S. trade representative (USTR) broad authority to investigate “unfair” foreign trade practices and take action to remedy them. This can include imposing tariffs on imported goods or negotiating new trade agreements. The use of Section 301 has been controversial, with some arguing that it can lead to protectionism and retaliation from trading partners.
Euronews' updated explainer examines the far-reaching effects of the UK's departure from the EU and the events that led to Brexit. One of the key issues in the Brexit negotiations has been the future trade relationship between the UK and the EU. Leaving the EU means that the UK will no longer be part of the EU's single market and customs union, which could have significant implications for trade.
This is an excerpt from Understanding Global Politics by Kevin Bloor. You can download the book free of charge from E-International Relations. The book provides an introduction to key concepts and theories in international relations, including globalization and trade.
President Trump reached a deal with Canada and Mexico to restructure the North American Free Trade Agreement, hoping a new trilateral accord would boost U.S. manufacturing jobs and exports. The new agreement, called the United States-Mexico-Canada Agreement, includes provisions on intellectual property, digital trade, and labor rights.
India is amongst the world's fastest-growing large economies and is an important player in global economic governance. India is already an important trade partner for many countries, and its participation in free trade areas could have significant implications for global trade.
A barrier to trade is a government-imposed restraint on the flow of international goods or services. Those restraints are sometimes obvious, such as tariffs or quotas, but can also be more subtle, such as regulations or intellectual property laws. Removing barriers to trade is a key goal of free trade areas.
A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be traded freely among member countries without tariffs or other trade barriers. Free trade agreements can have significant economic benefits but can also be politically controversial.