Trading Blocs And Free Trade Agreements

In recent years, there has been a flood of bilateral trade agreements between countries and the emergence of regional trading blocs. For example, the European Union now has more than 30 separate international trade agreements, including those with countries such as Colombia and South Korea. The World Trade Organization allows trading blocs as long as they lead to less protection against third countries than against the creation of the trading bloc Inefficient producers within the bloc can be protected against more efficient producers outside the bloc. For example, inefficient European farmers can be protected from cheap imports from developing countries. Trade diversion occurs when trade is diverted by efficient producers established outside the trading area. The DR-CAFTA is probably the most important for the creation of new highways that will cross the site from Panama to Mexico and even Texas. For these routes between these separate nations to become a reality, a trade agreement such as DR-CAFTA must reduce or completely eliminate tariffs in order to get materials and labor into and out of construction zones. Opponents of DR-CAFTA propose that this trade deal, like NAFTA, is just another way to globalize and monetize the interests of big business, not the interests of small businesses or citizens of a given nation. Supporters of DR-CAFTA see it as a natural development for the region and a thoughtful way to compete with mass global producers like China. One of the disadvantages of joining a customs union is that a country is not able to pursue its own independent trade agreements.

The WTO is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade runs as smoothly, predictably and as freely as possible. The WTO is centred on its multilateral trading system, which works through the search for consensus among all member countries (more than 150). The notion of consensus facilitates cooperation and perhaps an agreement that is most beneficial to all the countries concerned. MERCOSUR…..