As businesses continue to expand their reach globally, the importance of free trade agreements cannot be overstated. Free trade agreements (FTAs) are agreements between two or more countries to reduce trade barriers and increase trade by eliminating tariffs and non-tariff barriers. One of the most prominent organizations responsible for creating these agreements is the World Trade Organization (WTO).
The WTO is an international organization that regulates international trade and has 164 member countries. The organization was established in 1995 and replaced the General Agreement on Tariffs and Trade (GATT), which was created in 1947. The WTO’s main goal is to promote free trade by eliminating trade barriers and ensuring fair trade practices.
The WTO has been instrumental in creating numerous free trade agreements over the years. Some of the most prominent ones include:
1. North American Free Trade Agreement (NAFTA)
NAFTA was established in 1994 and is an agreement between the United States, Canada, and Mexico. The agreement eliminated tariffs on goods traded between the three countries and has been instrumental in boosting trade between them.
2. European Union-South Korea Free Trade Agreement
This agreement was established in 2011 and eliminated tariffs on 98% of EU exports to South Korea. It has helped increase trade between the two regions and has been beneficial for both parties.
3. Trans-Pacific Partnership (TPP)
The TPP was a free trade agreement between 12 countries, including the United States, Japan, Canada, and Australia. The agreement was designed to lower barriers to trade and investment and was expected to boost economic growth in the participating countries. However, the United States withdrew from the agreement in 2017.
4. USMCA (United States-Mexico-Canada Agreement)
USMCA replaced NAFTA in 2020 and includes updated provisions for digital trade, intellectual property, and labor standards. It has led to greater certainty and stability for businesses operating in the North American region.
5. Regional Comprehensive Economic Partnership (RCEP)
RCEP is a free trade agreement between 15 countries in the Asia-Pacific region and includes China, Japan, South Korea, and the 10-member states of the Association of Southeast Asian Nations (ASEAN). The agreement was signed in 2020 and is expected to boost intra-regional trade and economic growth.
FTAs have become more prevalent in recent years as countries continue to prioritize free trade policies. The WTO has played a significant role in facilitating these agreements, and their list of free trade agreements continues to grow. With more countries recognizing the benefits of increased trade, the future looks bright for international commerce.