October 12, 2021 - No Comments!

Trade-Diversion Effects Of Free Trade Agreements

After World War II, many nations pursued the goal of trade liberalization. One way to achieve this was through the General Agreement on Tariffs and Trade (GATT) and its successor, the WTO. Although GATT started with fewer than 50 member countries, the WTO now has 153 members as of 2010. The GATT and WTO agreements oblige all Member States to remove barriers to trade simultaneously, and the agreements are sometimes referred to as a multilateral approach to trade liberalisation. We note that the reorientation of trade is stronger for imports than for exports. We identify the trade effects of free trade agreements (FTA). An economic union will generally maintain free trade in goods and services, set common external tariffs between members, allow the free movement of capital and labour, and also make a supranational agency responsible for certain tax expenditures. .

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