Trade agreement

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A trade agreement (also known as trade pact) is a wide ranging tax, tariff and trade treaty that often includes investment guarantees. The most common trade agreements are of the preferential and free trade types are concluded in order to reduce (or eliminate) tariffs, quotas and other trade restrictions on items tradedbetween the signatories.

Contents

  [hide] 

• 1Classification of trade pacts
  • 1.1By number and type of signatories
  • 1.2By level of integration
  • 1.3Special agreements
  • 1.4By the World Trade Organization
• 2Reaction
• 3See also
• 4References
• 5External links

Classification of trade pacts[edit]

By number and type of signatories[edit]

A trade agreement is classified as bilateral (BTA) when signed between two sides, where each side could be a country (or other customs territory), a trade bloc or an informal group of countries (or other customs territories). A trade agreement signed between more than two sides (typically neighboring or in the same region) is classified as multilateral.

By level of integration[edit]

Stages of economic integration around the World (each country colored according to the most integrated form that it participates with):

  Economic and monetary union (CSME/EC$, EU/€, Switzerland–Liechtenstein/CHF)

  Economic union (CSME, EU, EAEU, MERCOSUR, GCC, SICA)

  Customs and monetary union (CEMAC/XAF, UEMOA/XOF)

  Common market (EEA–Switzerland, ASEAN)

  Customs union (CAN, EAC, EUCU, SACU)

  Multilateral Free Trade Area (CEFTA, CISFTA, COMESA, EFTA, GAFTA, NAFTA, SAFTA, AANZFTA, PAFTA, SADCFTA)

• v
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There are a variety of trade agreements; with some being quite complex (European Union), while others are less intensive (North American Free Trade Agreement).^[1] The resulting level of economic integration depends on the specific type of trade pacts and policies adopted by the trade bloc:

1. Separate
   • Trade and Investment Framework Agreement (TIFA)
   • Bilateral Investment Treaty (BIT)
   • Preferential Trade Arrangement (PTA)–limited scope and depth of tariffs reduction between the customs territories.
     • Free Trade Agreement establishing a Free Trade Area (FTA)–extensive reduction or elimination of tariffs on substantially all trade allowing for the free movement of goods and in more advanced agreements also reduction of restrictions on investment and establishment allowing for the free movement of capital and free movement of services
       • Common market–FTA with significantly reduced or eliminated restrictions on the freedom of movement of all factors of production, including