Question

Explane any two trade agreements and two trade barriers. Include realistic example of each.

Answer 1

Trade agreements:

A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common trade agreements are of the preferential and free trade types, which are concluded in order to reduce (or eliminate) tariffs, quotas and other trade restrictions on items traded between the signatories.

Preferntial trade agreements:

A Preferential trade agreement is much less broad covering preferential (i.e. low or lower other countries) tariffs for a set of products or services.

Examples include the North American Free Trade Agreement and the ASEAN Free Trade Area. Customs Unions: In Customs Unions, equal tariffs must be set by all members. The EU is an example of a

Free trade agreements:

A free trade agreement specifies free (cero tariff) trade between countries/states.

Example for free trade agreements include The European Union is a notable example of free trade today. The member nations form an essentially borderless single entity for the purposes of trade, and the adoption of the euro by most of those nations smooths the way further.

The barriers can take many forms, including the following:

1. Tariffs.
2. Non-tariff barriers to trade include: Import licenses. Export control / licenses. Import quotas. Subsidies. Voluntary Export Restraints. Local content requirements. Embargo. Currency devaluation. Trade restriction.

Examples:

Common examples of non-tariff barriers include licenses, quotas, embargoes, foreign exchange restrictions, and import deposits.