Question

Write a 250 words post

There are three types of trade agreements: Unilateral, bilateral, and multilateral trade agreements.

• What are the pros and cons of those trade agreements? Provide examples.

Answer 1

There are 3 types of trade agreements :

1. Unilateral Trade Agreement

Unilateral trade agreement is belongs to a type of the free trade agreement. It is a trade contract that a nation inflict with out considering others. The other nations have no choice in this matter. So it is unilateral. And this trade agreement is not open to negotiation.

PROS :

• Tariff work great in short term
• Tariff increase the price of imports
• Boosts economic growth and create jobs.

CONS :

• Drop in domestic company's export.
• Layoff recently hired workers.
• Drop in global trade.

EXAMPLE :

Under the generalized system of preferences, the US has unilateral trade policies. Countries grant preferential tariffs to imports from developing countries will developed through this. By the Trade Act of 1974, unilateral trade policy will instituted in Jan 1, 1976.

2.Bilateral Trade Agreement

The bilateral trade agreements are between the two nations. These nations will grant permission to access markets between each other.

PROS :

• Bilateral trade agreements increases trade between two countries.
• Easier to negotiate than multilateral trade agreement.
• They open market to successful industries.

CONS :

• It will cause less successful companies to go out of business.
• Bilateral trade agreements can often trigger competing bilateral agreement between other countries.

EXAMPLE :

World's largest bilateral agreement was signed on July 17, 2018 between the EU and Japan is the relevant example for bilateral trade agreement.

3. Multilateral Trade Agreement

The multilateral trade agreement is a trade unity between three or more countries. The imports and exports in the business will make easier by reducing tariffs. These agreement are between many countries. Therefore they are difficult to negotiate.

PROS :

• Multilateral agreement make all signatories treat each other the same.
• It increases trade for every participant.
• It standardize commerce regulations for all the trade partners.

CONS :

• Multilateral agreements are complex.
• Some companies and regions of country suffer when trade borders disappear.

EXAMPLE :

The North American Free Trade Agreement (NAFTA) which is approved on Jan 1, 1994 between US, Canada and Maxico is an example for Multilateral Trade Agreement