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Advantages And Disadvantages Of Unilateral Trade Agreements

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Trade agreement, is any contractual arrangement between states concerning their trade relationships. Trade agreements may be bilateral or multilateral—that is, between two states or more than two states. For most countries international trade is regulated by unilateral barriers of several types, including tariffs, nontariff barriers, and outright prohibitions. Trade agreements are one way to reduce these barriers, thereby opening all parties to the benefits of increased trade. In most modern economies the possible coalitions of interested groups are numerous, and the variety of possible unilateral barriers is great. Further, some trade barriers are created for other, noneconomic reasons, such as national security or the desire to preserve or …show more content…

Bilateral trade agreements are between two nations at a time, giving them favored trading status with each other. The goal is to give them expanded access to each other's markets, and increase each country's economic growth. This type of trade agreement standardizes business operations, in an attempt to level the playing field and also it keeps one country from stealing the other's innovative products, dumping products at cheap cost or using unfair subsidies. These agreements also standardize regulations, labour standards and environmental protections. Last, but certainly not least, they eliminate tariffs and other trade taxes. This gives companies within both countries a price advantage. Advantages: They are easier to negotiate than multilateral trade agreements, since they only involve two countries. This means they can go into effect faster, reaping trade benefits more quickly. If negotiations for a multilateral trade agreement fails, many of the nations will negotiate a series of bilateral agreements instead. Disadvantages: They can often trigger competing bilateral agreements between other countries. This can whittle away the advantages the FTA confers between the original two

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