Why would you take care of it? The United States has negotiated trade agreements with 20 countries to facilitate the flow of goods across the border where your customer is located. Access to the benefits of a free trade agreement means giving yourself a competitive advantage. The WTO also mediates trade disputes between member countries. If the government of one country accuses the government of another country of violating the rules of world trade, a WTO panel decides the dispute. (The panel`s decision may be appealed to an appellate body.) If the WTO finds that the government of a member State has not complied with the agreements it has signed, the member is required to change its policy and bring them into line with the rules. If the Member considers that it is politically impossible to change its policy, it may offer other countries compensation in the form of lower trade barriers for other products. If it decides not to do so, other countries may obtain wto authorization to impose higher tariffs (i.e. retaliatory measures) on products originating in the Member State concerned for its non-compliance. A free trade agreement (FTA) is an agreement between two or more countries in which countries agree, among other things, on certain obligations that affect trade in goods and services, investor protection and intellectual property rights. For the United States, the main objective of trade agreements is to reduce barriers to U.S. exports, protect U.S.

competing interests abroad, and improve the rule of law in FTA partner countries. Once negotiated, multilateral agreements are very powerful. They cover a wider geographical area, which gives signatories a greater competitive advantage. All countries also give themselves most-favoured-nation status and grant each other the best reciprocal trading conditions and the lowest tariffs. Generally speaking, trade diversion means that a free trade agreement would divert trade from more efficient suppliers outside the area to less efficient regions. On the other hand, the creation of trade implies that a free trade agreement creates trade that might not otherwise have existed. In any case, the creation of businesses will improve the national well-being of a country. [15] It is not surprising that financial markets see the other side of the coin. Free trade is an opportunity to open up another part of the world to local producers. One of the motivations for these standards is the fear that unconditional trade could lead to a “race to the bottom” in terms of labour and environmental standards, given that multinationals are singing the globe in search of low wages and lax environmental rules in order to reduce costs. Yet there is no empirical evidence of such a breed.

In fact, trade usually involves the transfer of technology to developing countries, which makes it possible to increase wage rates, as the Korean economy – among many others – has shown since the 1960s. In addition, increased revenues are allowing cleaner production technologies to become affordable. For example, replacing scooters produced in India with scooters imported from Japan to India would improve air quality in India. Free trade policy is not so popular with the general public. Among the main problems is unfair competition from countries where falling labour costs allow for lower prices and the loss of well-paying jobs for producers abroad. . . .