Multinational and Bilateral Trade Agreements and Their Effects on Your Business

There are only several totally isolated countries which make international trade with them impossible but there are very few of them. Countries negotiated mutually beneficial agreements with each other to simplify trade between nations, eliminate tariff and non-tariff barriers, recognize each others standards, etc. There are 2 types of international trade agreements: 1. Multilateral (or Regional) Agreements They set rules of trade between several countries. Multilateral agreements shape international trade unions, such as WTO, EU, NAFTA, etc. For example, WTO is regulated by General Agreement on Trade and Tariffs. European Union is regulated by several treaties, such as Treaty of Rome, Treaty of Maastricht, etc. 2. Bilateral Agreements They set rules of trade between two countries. For example, there are Canada-Peru, EU-South Africa, US-Australia and other free trade agreements. The agreements may be limited to certain goods and services or certain types of market entry barriers. Different types of agreements define the level of the international integration from free trade to customs and economic unions. When choosing countries for export or import consider following benefits of international trade agreements: Simplified access to enlarged customer base; Cutting your foreign market penetration costs due to the elimination, reduction or simplification of customs duties and processes and regulatory requirements; Optimization of your supply chain by dealing with suppliers from countries under the international agreement with your country; Optimization of your production operations by moving it abroad partially or completely; Simplified access to foreign investors and financial institutions to satisfy financing needs better; Simplified access to foreign labor force and simplified access of your employees to target markets. The most comprehensive and up-to-date source of the information on international trade agreements isWorld Trade Centers Regional Trade Agreements Information System. You can find agreements by country, product or status.

Bilateral

A bilateral agreement is made between two and only two states. The agreement can be political, military or economic. The major reason states might pursue bilateral agreements is because it is easier to negotiate with just one country rather than with several.

Multilateral

Multilateral agreements include more than two countries. States get involved in multilateral agreements because the responsibilities and risks are distributed among the group and thus the situation is more advantageous for individual states.

Economic Agreements

Economic agreements often take a bilateral form because they only have to take into account the specific economic characteristics of two states. Sometimes states make agreements to trade specific goods and sometimes they make agreements saying that they will not trade specific goods if they have protectionist concerns.

Military Agreements

Military agreements are usually multilateral, with several countries providing troops for specific operations. NATO and the forces of the African Union are prime examples.

Humanitarian Agreements

Sometimes organizations produce agreements about how people ought to be treated. The more countries sign on, the more credible the agreement. An example would be the UN's Universal Declaration of Human Rights in 1948.

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