Why Are Trade Agreements Essential To Global Economy

This report from the Corporate Europe Observatory and the Transnational Institute examines how law firms, arbitrators and financiers fuel the boom and investment arbitrage. The international investment regime has included countries in agreements that impose high costs on governments if they implement policy changes that affect the profits of powerful companies. Even if policy change, such as environmental regulation, had a positive impact on the country`s citizens, the enormous legal costs to states could reduce the benefits. Not to mention that legal costs are borne by the taxpayers of these countries. The legal industry is particularly benefiting from this process boom by seeking every opportunity to sue governments with different tactics enumerated in the report. (Corporate Europe Observatory und Transnational Institute) The question of whether the WTO fulfils its duty and fulfils its mission is the subject of ongoing debate. Yet the WTO currently has 104 members and 20 observer governments. WTO member countries account for nearly 97% of world trade and 98% of global GDP. As soon as the 20 observational governments become members, it is possible that the WTO will oversee the entire global economy. What began in Geneva in 1947 and which 23 nations focused exclusively on tariff reductions has become a truly global organization dealing with agriculture, labour standards, environmental issues, competition and intellectual property rights. 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 otherwise oppose or are indifferent to trade policy reforms could join the free trade campaign if they see the trade agreement as export opportunities to other countries. Therefore, free trade agreements between countries or regions are a useful strategy for liberalizing world trade.

In recent decades, the global economy has grown rapidly. This growth was partly driven by an even faster rise in international trade. Trade growth, in turn, is the result of both technological developments and concerted efforts to reduce trade barriers. Some developing countries have opened up their own economies to fully exploit economic development opportunities through trade, but many have not. Other trade barriers in industrialized countries are concentrated in agricultural products and labour-intensive industries, in which developing countries have a comparative advantage. Continued trade liberalization in these areas, particularly by developed and developing countries, would help the poorest to escape extreme poverty, while benefiting the industrialized countries themselves. – We use UNCOMTRADE data on the bilateral trade in parts and components.