Multilateral trade agreements are agreements between multiple countries aiming to promote international trade and investment. These agreements are essential in governing and regulating trade amongst countries. In this article, we will discuss the different types of multilateral trade agreements.
1. Free Trade Agreements (FTAs)
Free Trade Agreements (FTAs) are agreements between two or more countries that eliminate or reduce tariffs, quotas, and other trade barriers on goods and services. These agreements aim to increase trade between the participating countries by creating a level playing field, promoting economic growth, and creating jobs.
2. Preferential Trade Agreements (PTAs)
Preferential Trade Agreements (PTAs) are agreements that offer preferential treatment to certain goods or services from member countries. These agreements are aimed at promoting trade amongst developing countries and providing the least developed countries with increased access to markets.
3. Customs Union
A customs union is a type of multilateral trade agreement that establishes a common external tariff on goods imported from outside the union. This type of agreement aims to increase trade between member countries by removing internal trade barriers and adopting a common trade policy.
4. Common Market
A common market is a type of multilateral trade agreement that involves the free movement of goods, services, capital, and people between member countries. This agreement aims to integrate member economies and promote the free flow of goods, services, and capital.
5. Economic Union
An economic union is a type of multilateral trade agreement that involves the complete integration of member countries` economies. This includes the free movement of goods, services, capital, and people, a common currency, and a unified economic policy. The European Union (EU) is an example of an economic union.
In conclusion, multilateral trade agreements are essential in promoting international trade amongst countries. The different types of agreements discussed above serve different purposes and offer different benefits to member countries. It is important to understand the different types of multilateral trade agreements to ensure effective participation in international trade.