Trade agreements provide nations with economic stability with regard to imports and exports, and present opportunities to generate more capital and acquire goods. Such treaties set out the terms and conditions of continued trade between member states. Factors include tariffs, taxes, and duties on all goods that are imported or exported. The extent to which these terms can be negotiated depends on the type of agreement.
Current affairs changing the shipping industry
The global economy is currently going through an interesting period. The election of Donald Trump as president of the United States and the United Kingdom’s decision to leave the European Union have implications for future agreements. President Trump is looking to strengthen the USA’s position on the global market and has already pulled out of the Trans-Pacific Partnership (TPP). And more recently, China and the USA have implemented import tariffs against each other. This risks starting a trade war, which could have larger repercussions for the global economy.
The UK, a nation that relies on imports by sea, may lose access to the European Single Market as a result of Brexit. This could potentially prompt the British government to establish new trade deals throughout the world. It is likely that both the USA and the UK will focus on establishing bilateral agreements with other nations, which could significantly alter the global shipping landscape.
Strengthening ties between nations
Bilateral trade agreements are the most common and straightforward form of trade deal. These involve two counties, which makes terms easier to negotiate. They are also easier to withdraw from and both nations are better able to get what they want due to the lack of interference from other parties. As a result, both the USA and China use these agreements frequently.
According to the World Trade Organization, there are currently 455 regional trade agreements in force around the world.
Promoting trade worldwide
Multilateral trade agreements are a more complicated matter but can potentially be more profitable when effectively organized. They involve three or more countries and often cover a wide geographic area. Usually, this type of pact will make it easier for member countries to trade with one another by reducing tariffs and duties. Multilateral agreements are often viewed as an effective method for facilitating trade in the global economy, and they accelerate ocean-borne trade and container shipping in particular.
One of the most important multilateral trade agreements is the North American Free Trade Agreement (NAFTA). The program was set up in 1994 to encourage trade between the USA, Canada, and Mexico. The three member states can deal with each other at reduced rates, thereby simplifying the supply and demand of goods, benefitting economies, and boosting business for the maritime industry.
Authorities ensure that trade remains fair
The World Trade Organization (WTO) is responsible for ensuring that trade is carried out fairly between nations and that no country is exploited. It is the largest international economic organization in the world and regulates global commerce in collaboration with representatives of member governments. The three main areas of sea trade covered by the WTO are access to and use of port facilities, auxiliary services, and ocean transport.
The maritime industry will continue to drive global trade
The world is more connected than ever before and trade plays a vital role. By breaking down trade barriers and strengthening ties between nations, the global economy will reap the benefits. As an inherently globalized industry, shipping will continue to be influential in global trade.