Free Trade Agreement Preferential Tariff

Full approval, exports to EU regions, fact sheets, aid to exporters Published in November 2020 and before that, Sabine Weyand (other languages), Director General of DG Commerce, the fourth EU Implementation Report (other languages) gives an overview of the 2019 results and the work under way for the EU`s 36 main preferential trade agreements. The accompanying staff working document provides detailed information in accordance with the trade agreement and trading partners. As has already been said, these are rules under which a country unilaterally offers preferential rights to another country or group of countries. The country that offers preference removes or reduces import duties on imports from these countries without the same preferences. These rules generally focus solely on trade in goods. The European Commission reports annually on the implementation of its main trade agreements in the previous calendar year. At the international level, there are two large open-access databases created by international organizations for policy makers and businesses: the creation of free trade zones is seen as an exception to the World Trade Organization`s (WTO) most privileged principle, because the preferences that parties to a free trade area accord exclusively to each other go beyond their membership obligations. [9] Although GATT Article XXIV authorizes WTO members to establish free trade zones or to conclude interim agreements necessary for their establishment, there are several conditions relating to free trade zones or interim agreements leading to the creation of free trade zones. Both the creation of trade and the diversion of trade have a decisive impact on the establishment of a free trade agreement.

The creation of trade will result in a shift in consumption from a cost producer to a low-cost producer, which will lead to an expansion of trade. On the other hand, trade diversion will mean that trade will move from a low-cost producer outside the zone to a more expensive producer in the free trade agreement. [16] Such offshoring will not benefit consumers under the free trade agreement, which will be deprived of the opportunity to purchase cheaper imported goods. However, economists note that trade diversion does not always harm the overall national well-being: it can even improve national well-being as a whole if the volume of misappropriated trade is low. [17] In general, trade diversion means that a free trade agreement would divert trade from more efficient suppliers outside the zone to less efficient suppliers within the territories.

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