There are only several totally isolated countries which make international trade with them impossible but there are very few of them. Countries negotiated mutually beneficial agreements with each other to simplify trade between nations, eliminate tariff and non-tariff barriers, recognize each other’s standards, etc. There are 2 types of international trade agreements:
1. Multilateral (or Regional) Agreements
They set rules of trade between several countries. Multilateral agreements shape international trade unions, such as WTO, EU, NAFTA, etc. For example, WTO is regulated by General Agreement on Trade and Tariffs. European Union is regulated by several treaties, such as Treaty of Rome, Treaty of Maastricht, etc.
2. Bilateral Agreements
They set rules of trade between two countries. For example, there are Canada-Peru, EU-South Africa, US-Australia and other free trade agreements.
The agreements may be limited to certain goods and services or certain types of market entry barriers. Different types of agreements define the level of the international integration from free trade to customs and economic unions.
When choosing countries for export or import consider following benefits of international trade agreements:
- Simplified access to enlarged customer base;
- Cutting your foreign market penetration costs due to the elimination, reduction or simplification of customs duties and processes and regulatory requirements;
- Optimization of your supply chain by dealing with suppliers from countries under the international agreement with your country;
- Optimization of your production operations by moving it abroad partially or completely;
- Simplified access to foreign investors and financial institutions to satisfy financing needs better;
- Simplified access to foreign labor force and simplified access of your employees to target markets.
The most comprehensive and up-to-date source of the information on international trade agreements is World Trade Center’s Regional Trade Agreements Information System. You can find agreements by country, product or status.
Should you have any questions on international trade agreements and their benefits in your case, contact Win Global Partners