Free trade agreements primarily relate to the issues of zeroing or reducing customs duties. They also affect the specifics of regulating other aspects of trade in goods between the participating countries (Hastedt, 2015). I believe that all three types of free trade agreements are equally important. Each one has both advantages and disadvantages, while such contracts’ objectives and the application scope differ. This explains the impossibility of distinguishing the preferable one among them. These conclusions are based on an analysis of the available literature on free trade agreements and their types.
Regional agreements were created to develop trade and enhance economic integration between states. Once countries have reached an agreement on all the details, they are expected to take action to increase the movement of goods and services. The advantage of this type of agreement is that the participants do not have to be neighbors – that is, it becomes possible to overcome geographic barriers (Hastedt, 2015). Such overcoming of obstructions will inevitably lead to economic growth, which is explained by states’ access to foreign markets (Wolla & Esenther, 2017). Agreements of this type do not provide for many participants, which affects the speed of decision-making and the search for a compromise in questionable situations.
The advantage of global agreements will be their impact power since a violation is fraught with significant deterioration in relations with many member countries. However, regional trade agreements can lead to significant inequalities between states. Poorer countries may be forced to conclude contracts on conditions that are disadvantageous to them (Mon & Kakinaka, 2020). It also reduces the opportunity for market entry by states that are not parties to the treaty. High tariffs are set for them; this process can be described as the localization of trade. Thus, other countries are discriminated against for not participating.
The essence of bilateral agreements is also to increase trade between countries, but the key feature is the presence of only two participants. As a result of such a contract, residents of a particular country manage to receive foreign goods and services at lower prices (Wolla & Esenther, 2017). In addition, it takes even less time to conclude such an agreement than for a regional one due to the minimum number of required participants – two countries. The conclusion of such an agreement is fraught with the emergence of conflicts over the content and conditions of bilateral contracts of other countries. Small businesses are also becoming less protected as large corporations with significant capital begin to fill the market.
In the field of international legal regulation, there is a need for uniform rules of conduct that are binding on all states. However, global treaties offer variability in their content, which can negatively affect compliance. It is also worth noting the long terms of drawing up, discussing, and finally signing such agreements. After all, it is crucial to consider all the cultural, social, and legal aspects and traditions of other countries at once.
It seems that at the present stage of the development of the US economic system, it is preferable to use all types of agreements. However, it is worth doing this, given the existing shortcomings of each kind of contract. It is worth mentioning that many of these potential threats can be prevented and regulated. It is also necessary to assess how the states’ goals are related to the type of agreement they choose.
References
Hastedt, G. (2015). American foreign policy: Past, present, and future. London: Rowman & Littlefield.
Mon, Y., & Kakinaka, M. (2020). “Regional Trade Agreements and Income Inequality: Are There any Differences between Bilateral and Plurilateral Agreements?” Economic Analysis and Policy 67: 136-153. doi:10.1016/j.eap.2020.07.003.
Wolla, S. A., & Esenther, A. (2017). “Does International Trade Create Winners and Losers?” Page One Economics, 1-5.