Bilateral Trade Agreements Essay Example | Topics and Well Written Essays - 750 words

Bilateral Trade Agreements - strive ExampleBilateral trade agreements can also create political and economic ties between the fragmenties, which in turn provide more than stability (Rodrguez). However, it provides loopholes wherein powerful nations can exploit the agreements to the disadvantage of the maturation countries. cardinal of the opposition to the free trade, such as the bilateral trade agreements is the infant industry argument (Mankiw). It is base on the belief that the industries of the create nations might not be well equipped to compete against the giants of the more powerful nations. This then will lead to the death of the local industry. Bilateral trade agreements simply belt down the local industries who have not exhibited economies of scale. In economics terms, the failure to achieve economies of scale on the part of the local industries, because they are relatively new will result to a less efficient merchandise compared to those who are old in the industry and this will be manifested in the relatively high prices of the causation (Robert S. Pindyck).This argument is validated by the study of Rodriguez. According to him trade agreements between nations with large economic aim discrepancy can actually hurt the weakest party (Rodrguez). Moreover, he gave the following effects on the developing nations of trade agreements. Reciprocity and national treatment (the obligation whereby foreign goods, services and economic operators must commence the same treatment as local ones) oblige developing countries to implement broad liberalisation in market main course in goods, services and government procurement, which may result in surges of imports moreover, tariff elimination, in like manner depriving developing countries of revenues, removes powerful instruments of industrial and agricultural policy to protect their infant industries.Market access gains for developing nations may be limited if agricultural subsidies in rich nations are not reduced constraining rules of origin, technical barriers to trade (TBTs) such as quality standards and supply-side constraints also limit the possible gains from improved access to developed countries markets.Reduction of policy space for developing countries many of the issues included in the current North-South FTAs reduce or fully remove policy options and instruments available to a developing country to pursue its development objectives (UNCTAD, 2007) spring RodrguezThe United States is one of the countries who have been very active in pursuing bilateral trade negotiation against smaller nations. Some of these agreements are with Costa Rica, Chile and Singapore. In the past two years, the US has initiated all-around(prenominal) free trade negotiations with 19 countries, a market representing an estimated US $2.5 trillion worth of opportunities to American business. Simultaneously, however, these agreements blunt the American market, exposing, in particular, US industries depe ndent on sweat turn over that cannot compete with low labour costs in poorer countries around the world. The difference is that the US has the resources to diffuse the pain of the transition, amounting to support of US$1.8 trillion in 2003, while developing