What Is A Unilateral Trade Agreement

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Despite the potential tensions between the two approaches, it appears that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy. However, both the WTO and agreements such as NAFTA are controversial among groups such as alter-globalists, who argue that such agreements serve the interests of multinationals and not workers, while free trade was a proven method of improving economic performance and increasing overall income. To counter this opposition, pressure has been exerted for labour and environmental standards to be included in these trade agreements. Labour standards contain provisions relating to the minimum wage and working conditions, while environmental standards would prevent trade if there were fears of environmental damage. Trade agreements designated by the WTO as preferential agreements are also referred to as regional agreements (RTAs), although they are not necessarily concluded by countries within a given region. Currently, 205 agreements are in effect as of July 2007. More than 300 people have been notified to the WTO. [10] The number of free trade agreements has increased significantly over the past decade. Between 1948 and 1994, the General Agreement on Tariffs and Trade (GATT), predecessor to the WTO, received 124 notifications. Since 1995, more than 300 trade agreements have been concluded.

[11] Unilateral trade preferences are one of the main instruments offered by industrialized countries to promote exports from developing countries. This paper analyses the impact of unilateral trade preferences on developing countries by focusing on Mozambique`s experience. In this paper, we analyse whether unilateral preferences offered by the EU are “valuable” to Mozambican exporters, based on their effects on preferential margins, utilization rates and export prices. We use a detailed dataset with HS8 unit values for the period 2000-2007. Our results indicate that ,i) for many product lines, export margins are zero; (ii) utilization rates are generally high; (iii) however, this does not result in positive price ranges obtained by Mozambican exporters compared to MFN competitors. These results raise doubts about the “value” of preferences and their potential impact on developing country exports. Unilateral preferences should therefore have two major effects. First, they allow the exporter to record a higher price than it would normally have recorded in the tariff-induced price market. Second, the price range allows the preferred exporter to export more quantities. Keep in mind that this corresponds to the case of trade diversion, in which unilateral preferences aim to redirect commercial revenues and transfer to DCS.

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