If the threat does not work the country has to decide if it would rather reduce

If the threat does not work the country has to decide

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If the threat does not work, the country has to decide if it would rather reduce the economic well-being of its citizens (by carrying out the threat) or lose credibility in negotiations (by reneging on its threat) Trade Agreements
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A country can liberalize trade with o unilateral reductions in trade restrictions on its own o multilateral agreements with other nations, reduce its trade restrictions while other countries do the same. Examples of trade agreements: o North American Free Trade Agreement (NAFTA), 1993 Multilateral approach. Lowered trade barriers among the U.S., Mexico, and Canada o General Agreement on Tariffs and Trade (GATT) Multilateral approach. Continuing series of negotiations among many countries with the goal of promoting free trade. World Trade Organization (WTO) est. 1995, o An international institution o As of 2007, 150 countries have joined the organization, accounting for 97% of the world trade. o Administers and enforces trade agreements, o Provides a forum for negotiations o resolves dispute among member countries o Countries wanting to achieve freer trade can take two approaches to cutting trade restrictions: a unilateral approach or a multilateral approach o A unilateral approach occurs when a country lowers its trade restrictions on its own. A multilateral approach occurs when a country reduces its trade restrictions while other countries do the same o The North America Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) are multilateral approaches to reducing trade barriers o The rules established under GATT are now enforced by the World Trade Organization (WTO) o The functions of the WTO are to administer trade agreements, provide a forum for negotiation, and handle disputes that arise among member countries Pros and Cons of Multilateral Approach to Free Trade: (+) multilateral approach has the potential to result in freer trade than a unilateral approach because it can reduce trade restrictions abroad as well as at home. (-) If international negotiations fail, the result could be more restricted trade than under a unilateral approach Unilateral approach: country does not trade
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