Whether by lowering or eliminating tariffs, making it easier to sell goods overseas, or providing regulatory harmonization, trade agreements can help businesses. They can also reduce the number of restrictions on data sharing, a key part of global supply chains.
Trade agreements are legal contracts between two or more countries that set the rules for trading in a particular region or over a range of policy areas, including behind-the-border regulations like competition policy and government procurement laws. They can also cover the rules for intellectual property rights and investment, which can make it easier for companies to access markets and work with local partners.
The most familiar type of trade agreement is a free trade agreement (FTA). FTAs lower or eliminate tariffs on goods produced by signatory countries, which can increase the competitiveness of the products and services they produce. They may also include provisions for regulatory cooperation and market development. They can be bilateral, such as between the United States and Canada, or multilateral, such as the North American Free Trade Agreement.
Regional trade agreements are also popular. These typically have a geographic focus and limit the countries covered by their terms to a small number of large, developed economies that share histories, demographics, or economic goals. They can be bilateral or multilateral, and often include most-favoured-nation status and national treatment of nontariff barriers.
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