Question

What does it mean to have “normal trade relations” with a country and why is this a big deal?

Answer 1

The 'normal trade relations' is a designation or status given by USA to their international trading partners which enable the recieving countries of this honour to carry out trade with various advantages with  low tariffs or high import quotas. USA sarted to give the legal designation of 'normal trade relations' from 1998 after changing it from MFN (most favoured nation). Normal trade relation enable small and developing countries to boost their economy by exporting their products to USA which has considered them to be eligible for normal trade relations. It matters a lot for smaller and developing countries a lot to carry out trade relations with a powerful foreign country like USA with many trade advantages which would not have been possible without this status as they are not powerful enough to negotiate trade deals with big countries. Basically, small countries get the access to larger markets as there are fewer trade barriers lowering their cost of exporting costs making their products more competitive in the foreign market. The tax rates for all imported items will be same which reduces the task of calculating different tax and customs for different products. Removal of trade barriers by conferring 'normal trade relations' to countries enable them to grow their economy by expanding their business and industries. Employment opportunities also go up as there are many companies who would like to invest in the exporting business. Companies will have economies of scale as the demand for products will increase