Which countries are the most involved when it comes to trade? Here are those who made it on top in terms of the number of trade agreements:
What are RTAs?
According to the WTO, “RTAs are reciprocal preferential trade agreements between two or more parties.”
The WTO RTA database serves as a repository of:
- the legal texts and annexes of all RTAs notified to the WTO,
- preferential tariff and trade data provided by RTA parties, and
- other related documents.
The RTA section of WTO Trade Policies Review Division was responsible for the development as well as the subsequent maintenance of the database.
The European Union (EU) currently holds the most number of trade agreements with countries or free trade areas at 42 agreements in total.
This is succeeded by Switzerland with 31 agreements. Norway and Iceland come at a close third with 30 agreements each. On the other hand, the US only has 14 trade agreements in their hands.
Why are trade agreements important?
Trade agreements reduce trade barriers including tariffs, taxes, and duties on import and export of goods.
Some of the advantages that countries can benefit from trade agreements include:
- Increased Economic Growth
- More Dynamic Business Climate
- Lower Government Spending
- Foreign Direct Investment
- Technology Transfer
Too much freedom in free trade can also lead to some repercussions. Some of the possible threats trade agreements may pose include:
- Increased Job Outsourcing
- Theft of Intellectual Property
- Crowd out Domestic Industries
- Poor Working Conditions
- Degradation of Natural Resources
- Destruction of Native Cultures
- Reduced Tax Revenue
These problems will arise especially when there are too few trade restrictions between the countries in the agreement.
On the flip side, trade protectionism which involves increases tariffs and imposition of quota on imported goods will prevent countries from enjoying the accelerated growth free trade can offer.
In light of this, countries participating in trade agreements should make sure that the stipulations will enable them to do two things. First, the stipulations should enable them to attain the growth that these trade agreements promise on paper. Second, these stipulations should also ensure that the welfare of the citizens is well-protected on all fronts.