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Trade Agreement

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A commercial or trade agreement is an agreement established by two or more countries under the protection of international law and with the aim of improving their relations in economic and commercial exchange terms.

This tool is very common in situations in which different nations try to establish a model of collaboration between them. Often a trade agreement seeks to reach an agreement regarding customs duties or tax matters between the two regions, within the economic field of the import and export of products and raw materials.

Other important aspects on which this type of agreement is centered is border control, the goods in which this type of measures falls or the currency with which trade between countries is carried out. On the other hand, the establishment of what type of jurisdiction is responsible for resolving the problems that economic and commercial activity may cause is also particularly important in the agreement.

The general line that follows the writing of this type of international agreements is the protection of the associates against third parties, while establishing a relationship of free entry and circulation of goods, services or capital. In other words, a country A applies policies with a lower protectionist nature towards the exports of a country B, and vice versa.

The harmonization of trade relations between countries meets the aforementioned variables and can reach different levels of complexity depending on many factors. One of them is the degree of economic sovereignty available to the signatory countries. For example in some countries to establish a specific trade agreement it must first inform and await the positive response of the European Union, to which with its membership it granted different powers (part of its economic sovereignty).

Types of trade agreement

- International cooperation. Several countries establish a relationship through which they pursue certain common objectives in the area of ​​solidarity aid and without greatly modifying their systems.
- Partial Scope Agreement. Through this treaty, the countries that intervene decide to develop a clear reduction of trade restrictions to favor economic transactions between them.
- Free Trade Agreement. This treaty focuses on the elimination of trade barriers within the area or area that delimit countries seeking greater harmonization among their economies.
- Customs Union. It's the next step to the free trade agreement, since it involves the inclusion of a common external tariff among the members of the union vis-à-vis third parties.
- Common Market. We would be talking about a step ahead of the customs union, in which in addition to the above, the free flow of people and capital is facilitated.
- Economic Union. It's the maximum point in terms of international trade agreements, since it means total harmonization between the systems of the participating countries. These adapt their respective economic policies so that there is convergence and their unification.

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