Customs Union And Free Trade Agreement

Customs Union And Free Trade Agreement

Second, the multilateral removal of trade barriers can reduce political opposition to free trade in each of the countries concerned. This is because groups that would otherwise be opposed or indifferent to trade reforms could join the campaign for free trade if they saw in the trade agreement opportunities to export to other countries. Therefore, free trade agreements between countries or regions are a useful strategy for the liberalization of world trade. However, a customs union has a great advantage: the border between Ireland and Northern Ireland would remain open and easy to cross. The EU is therefore not just a free trade area, it is an internal market. The advantage of these bilateral or regional agreements is that they promote greater trade between the contracting parties. They can also accelerate the liberalization of world trade when multilateral negotiations are in difficulty. Recalcitrant countries that are excluded from bilateral agreements and therefore do not participate in the increased trade they have caused may then be led to join them and remove their own barriers to trade. These advantages must, however, be offset by a disadvantage: by excluding certain countries, these agreements may transfer the composition of trade from low-priced countries which are not parties to the agreement to high-cost countries. . . .

Comments are closed, but trackbacks and pingbacks are open.