Trade%20Agreements - MBA Education & Careers LEARNING...

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Unformatted text preview: MBA Education & Careers LEARNING CORNER Trade Agreements All you wanted to know about trade agreements ! Free Trade Area A Free Trade Area is a group of nations among which goods pass free of trade barriers but which does not adopt a common external tariff regime. intellectual property rights protection, which has been criticised as more of an instrument for ensuring royalties are collected rather than a true trade issue. Free Trade Agreement Customs Union A Free Trade Agreement (FTA) is a legally binding agreement between two or more countries to bring about closer economic integration by eliminating or reducing tariffs and other restrictions on trade. Sometimes an FTA is more correctly referred to as a preferential trade agreement since member countries provide each other preferential market access for goods and services. The exact nature and scope of the preferential treatment is decided through a process of negotiations and may vary from country to country. Examples include the lowering or elimination of import tariffs, the relaxation or removal of quantitative import restrictions, and/ or the waiver of compliance with certain domestic regulations. Trade agreements have taken on the characteristic of an instrument for social change by addressing behaviours that have an adverse impact on members of a society as well as business and trade such as corruption, environmental damage, child labour, and neglecting the rights of workers. Trade agreements may address issues that are arguably not strictly trade -related. An example is A Customs Union is a group of countries among which goods pass free of trade barriers but which also adopt a common external tariff regime. As such, the European Union (or European Community as it is also called ) is a customs union but NAFTA (North American Free Trade Agreement) is a free trade area because the external trade barriers of Mexico, USA and the USA were not harmonised. Most Favoured Nation Under the Most Favoured Nation rule, members of the World Trade Organisations must give fellow WTO members no less favourable treatment in terms of tariff rates and other trade measures than they afford to any other country. MFN is the rule guiding trade in goods among members of the WTO. Free Trade Agreements (FTAs) and Customs Unions (together defined as Regional Trade Agreements or RTAs in WTO terminology) are exceptions to this rule. The crucial test of an FTA or Customs Union is that it must eliminate all September 2004 33 MBA Education & Careers LEARNING CORNER tariffs and other restrictions on substantially all the trade i n goods between its member countries. While free trade in goods has been the focus of virtually all FTAs concluded to date, the WTO also provides for bilateral or regional agreements liberalising trade in services. Technically, these are called “economic integration agreements” (EIAs), sometimes described as “services FTAs”. While an FTA as defined under the WTO does not have to include trade in services, most contemporary agreements that are labelled “Free Trade Agreements” cover both goods and services, reflecting the growing importance of the services in the global economy. Such agreements are effectively a combination of FTAs and EIAs. In fact, FTAs together with EIAs provide a framework under which countries can negotiate a range of other bilateral undertakings governing their economic relations. In addition to trade in goods and services, Free Trade Agreements frequently cover such issues as investment protection and promotion, government procurement and competition policy, which are either not yet encompassed by WTO rules or only partially covered. FTAs often also contain practical provisions in areas such as harmonisation or mutual recognition of technical standards, customs cooperation, application of subsidies or antidumping policies, electronic commerce, and protection of intellectual property rights. Such provisions do not have to be included in FTAs under WTO rules, but they can play an important role in facilitating trade between the parties and in a broader regional context. Such bilateral or multilateral economic agreements are often given titles such as “Closer Economic Agreements” or “Partnerships” to reflect their broad scope, even if FTA provisions eliminating restrictions on trade in goods form the core element. September 2004 34 Do you know ? What is Precipitation? The formation of water particles or ice within the cloud that fall towards earth’s surface is called precipitation. It occurs when condensation takes place rapidly within the cloud. The main types are rain, drizzle, sleet, snow and hail. Any of these may evaporate before reaching the ground surface, appearing as streamers below cloud base-a phenomenon known as virgo. (i) Rain: R ain is a form of precipitation consisting of the drops of water formed by the coalescence of minute condensation droplets within the clouds. In strict terms, these drops have a diameter ranging from about 0.5 mm to 5.0 mm, although smaller drops can be called rain if they are widely scattered. (ii) Drizzle: It is a form of precipitation in which the water droplets are very fine (less than 0.5 mm) and are close together. Normally, drizzle is produced by stratus and stratocumulus clouds. (iii) Sleet: G enerally, it implies a form of precipitation consisting of either partlymelted snowflakes or rain and snow falling together. In USA, it implies a form of precipitation consisting of frozen raindrops that have subsequently partially melted. (iv) Snow: It is a form of precipitation consisting of crystals of ice. It is produced when condensation takes place at a temperature below freezing point, so that the minute crystals (spicules) of ice form directly from the watervapour. These may fall as they are but more commonly they combine together to form snowflakes, which display an infinite variety of patterns. (v) Hail: Precipitation in the form of ice-pellets (hail stones) that develop in and fall from cumulonimbus clouds, either at a cold front or where intense heating of surface causes rapidly-ascending convection currents. The hail stone develops in the updraught of air as water vapour freezes onto the surface of a nucleus embryo of ice in the cloud. When it has grown sufficiently, its weight overcomes the force of the updraught and it falls. Hail consists of rounded lumps of ice, having an internal structure of concentric layers much like an onion. ...
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This note was uploaded on 04/11/2010 for the course ECONOMICS HU-203 taught by Professor Hitashi during the Spring '10 term at Punjab Engineering College.

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