Question

What are the benefits of being a part of a regional trade agreement?

Answer 1

Regional trade agreements refer to a treaty signed by two or more countries to encourage the free movement of goods and services across the borders of its members. The agreement comes with the internal laws that Member States apply to each other. When dealing with non-Member Nations, there are formal laws in place that Members abide by.

Member States benefit from trade agreements, especially in the form of creating more job opportunities, lower unemployment rates and market expansion. However, because trade agreements typically come with investment guarantees, investors wishing to invest in developing countries are shielded against political risk.
Businesses in Member States enjoy greater opportunities to invest in new markets, due to the favorable negotiating terms of the policies contained in the agreements.

Export deals open a number of doors to companies. When they gain exposure to new markets, rivalry may get more intense. Greater competition pressures companies to manufacture better quality goods. It also leads to greater variety for consumers. When there is a wide range of high-quality items, companies may increase customer loyalty.