The benefits of trade agreements for consumers: lessons learned from EU trade policy 2. Access to new markets – Trade with MERCOSUR increased significantly after the free trade agreement. Free trade agreements facilitate competitive access for exporters and importers in partner countries. For example, imports of copper wire from Malaysia experienced a sudden increase after the signing of the India-ASEAN Free Trade Agreement in 2010. It not only leads to the creation of trade, as in the case of imports of bitumean coal from Indonesia, but also causes trade diversions from one country to another. Countries can insist that foreign companies build local factories as part of the agreement. You can ask these companies to share the technology and train local workers. Trade agreements open up markets and provide incentives and protection for businesses. These include obligations to protect intellectual property rights and workers` rights and to open up regions to competition.

They also regulate environmental standards and improve customs facilitation. According to Alan Blinder, a professor of economics at Princeton University, “exporters tend to be more technologically sophisticated and create better jobs.” Trade and finance support each other. Finally, global investments allow for greater diversification and risk sharing. Another thing about a free trade area is that not everything that is imported from outside can usually be freely traded within the territory. For example, two countries in a free trade area, such as the United States and Mexico, refrain from imposing tariffs on each other. However, if the United States imports bananas from South America, for example, it can impose certain tariffs. While our approach does not allow us to identify the exact sources of these quality improvements, we do discuss possible mechanisms. One explanation consistent with a growing literature using firm-level data is that foreign exporters are improving quality to prepare to serve the EU market after the implementation of trade agreements (Verhoogen 2008, Iacovone and Javorcik 2012). 5.

Technology transfer and increased integration – Increased trade leads to better market integration and also facilitates the transfer of skills and technology. Making Canadian exporters more competitive in global markets has been a constant goal of the Canadian Trade Commissioners Service (TCS) over its 125-year history. The TCS`s approach has expanded over time to promote Canada`s network of trade agreements that reduce and eliminate barriers to trade. In recent work, we examine the impact on consumers of trade agreements negotiated by the EU between 1993 and 2013 (Berlingieri et al. 2018). The EU provides an interesting case study in this context, as it is the world`s largest trading bloc and has been a productive negotiator of trade agreements over the past two decades. A free trade area (FTA) refers to a specific region in which a group of countries in that region signs an agreement that seals economic cooperation between them. .