Towards A Free Trade Agreement

It is also important to note that a free trade agreement is a mutual agreement, which is permitted by Article XXIV of the GATT. Autonomous trade regimes for developing and least developed countries are authorized by the decision adopted in 1979 by the signatories to the General Agreement on Tariffs and Trade (GATT) on differential and more favourable treatment, reciprocity and wider participation of developing countries (hereinafter referred to as the ”enabling clause”). This is the WTO`s legal basis for the Generalised System of Preferences (GSP). [13] Free trade agreements and preferential trade regimes (as indicated by the WTO) are considered to be most-favoured-nation derogations. [14] Both the creation of trade and the diversion of trade are decisive effects that are observed in the creation of a free trade agreement. The creation of businesses will lead to the relocation of consumption from an inexpensive producer to an inexpensive producer, which will increase trade. On the other hand, trade diversion will have the effect of shifting trade from a lower-cost producer outside the area to a more expensive one under the free trade agreement. [16] Consumers will not benefit from such a deferral under the free trade agreement, as they will be disinterested in the possibility of buying cheaper imported goods. However, economists find that trade diversion does not always harm aggregate national welfare: it can even improve aggregate national welfare if the volume of diverted trade is low. [17] Since WTO members are required to communicate their free trade agreements to the secretariat, this database is based on the most official source of information on free trade agreements (in the WTO language known as regional trade agreements).

The database allows users to obtain information on trade agreements that have been notified to the WTO by country or by theme (goods, services or goods and services). This database provides users with an up-to-date list of all agreements in force, but those that have not been notified to the WTO may be lacking. Reports, tables and graphs containing statistics on these agreements and, in particular, the analysis of preferential tariffs are presented. [26] There are important differences between customs unions and free trade areas. Both types of trading blocs have internal agreements that the parties conclude to liberalize and facilitate trade between them. The key difference between customs unions and free trade areas is their treatment vis-à-vis third parties[clarification of concepts required]. While a customs union requires all parties to set and maintain identical external tariffs for trade with non-parties, parties to a free trade area are not subject to such a requirement. Instead, they may import and maintain the customs procedure applicable to imports from non-Parties which they deem necessary. [3] In a free trade area without harmonized external customs duties, the Parties will adopt a system of preferential rules of origin to eliminate the risk of relocation.

[4] U.S. Trade Representative Robert Lighthizer and Betty Maina, Kenya`s Cabinet Secretary for Industrialization, Trade, and Enterprise Development, today officially began negotiations for a U.S.-Republic of Kenya trade agreement. . . .