International Trade Agreements: Why Are They So Vital?

International Trade Agreements: Why Are They So Vital?

Trade Agreements are important at all levels because they help commerce flow, excite competition which keeps world economies circulating and growing. Many times these agreements begun, but then halted because one country decides that it needs to protect one or more industries from harm by other nation’s imports.


When imports enter a country they normally have a tariff or a tax. So for example: when you are purchasing an item from France it’s more expensive because of a duty that the importer had to pay for it to come in. When a Trade Agreement is negotiated there is an elimination of that tax then the import comes in freely and the item may be less expensive than one you could purchase in the United States. If too many of those items are coming in then there may be concerns that there needs to be protection of that industry.


The US, and all countries, want to sell to consumers outside of the country; therefore they want businesses to export and increase their trade deficits. Exports are goods and services that are made in a country and sold outside its borders. There is a balance because as the export sends a product to another country it too will be taxed. In that foreign country so that that national can protect its domestic residents and industries.


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