09 abr Free Trade Agreement Definitions
As a result, the U.S. interest was to protect its own economy from the products of its southern neighbors. In 2009, the United States spent $22 billion in agricultural subsidies, making it more difficult to access the agricultural market and weakening producer productivity. The main problem for Latin American nations in trade with the United States is therefore not that of foreign tariffs. These are the non-tariff barriers of the United States and the subsidy policy. In principle, free trade at the international level is no different from trade between neighbours, cities or states. However, it allows companies in each country to focus on the production and sale of goods that make the best use of their resources, while others import goods that are scarce or unavailable domesticly. This mix of local production and foreign trade allows economies to grow faster and, at the same time, better meet the needs of their consumers. The benefits of free trade were outlined in On the Principles of Political Economy and Taxation, published in 1817 by economist David Ricardo.
A free trade area will be established between two or more states. Import tariffs and non-tariff barriers between them are removed. Rules on reciprocal trade, services and intellectual property protection are also established. Goods and services can be exchanged between Member States without tariffs or taxes and investments can be negotiated without barriers (see Malcher 2005: 86). In Latin America, the first free trade agreement with the Association Latinoamericana de Libre Comercio (ALALC) was established in 1960, Pacto Andino followed in 1969 and in 1980, ALALC was replaced by the Associationcin Latinoamericana de Integracin (ALADI). These should promote regional cooperation as part of the Cepalismo strategy. The United States currently has 14 free trade agreements with 20 countries. Free trade agreements can help your business enter and compete more easily in the global marketplace through zero or reduced tariffs and other provisions.
Although the specifics of each free trade agreement are different, they generally provide for the removal of trade barriers and the creation of a more stable and transparent trade and investment environment. This makes it easier and cheaper for U.S. companies to export their products and services to the markets of their trading partners.