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12/26/2016

WhatAreBilateralTradeAgreements?Pros,ConsandList

U.S. Economy

What Are Bilateral Trade Agreements? Pros, Cons and List


The Top 12 U.S. Bilateral Trade Agreements
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U.S. President Barack Obama (R) and German Chancellor Angela Merkel arrive to pose with other leaders for a group photo during the G20 summit on September 6, 2013 in
St. Petersburg, Russia. Leaders of the G20 nations made progress on tightening up on multinational company tax avoidance, but remain divided over the Syrian conict as they
enter the nal day of the Russian summit. Photo by Anton Denisov/Host Photo Agency via Getty Images

By Kimberly Amadeo
Updated October 25, 2016

Denition: Bilateral trade agreements are betweentwo nations at a time,giving themfavored trading status with each other. The
goal is togivethem expanded access to each other's markets, and increase each country's economic growth.
How do they do this? There are ve general areas where they standardize business operations, in an attempt to level the playing
eld. That keeps one country from stealing the other's innovative products, dumping products at a cheap cost, or using unfair
subsidies.

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WhatAreBilateralTradeAgreements?Pros,ConsandList

These agreements also standardize regulations, labor standards and environmental protections. Last, but certainly not least, they
eliminate taris and other trade taxes. This gives companies within both countries a price advantage.

Advantages
They are easierto negotiate than multilateral trade agreements, since they only involve two countries. This means they can go into
eect faster, reaping trade benets more quickly.If negotiations for amultilateral trade agreement fails, many of the nations will
negotiate a series of bilateral agreements instead.

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WhatAreBilateralTradeAgreements?Pros,ConsandList

Disadvantages
They can often trigger competing bilateral agreements between other countries. Thiscan whittle away the advantages the
FTAconfers between the originaltwo nations.

Examples
TheTransatlantic Trade and Investment Partnershipwould remove current barriers to trade between theUnited Statesand
theEuropean Union. It would be the largest agreement so far, beating even NAFTA.
It is under negotiation, but missed its 2014 deadline for completion. Even though the EU consists of many member countries, it can
negotiate as one entity. This makes the TTIP a bilateral trade agreement.
The U.S. has bilateral trade agreements in force with 12other countries. Here's the list, year it went into eect, and results.

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1. Australia( January 1, 2005) -This agreement generated$26.7 billion in 2009,increasingtrade23% since its inception.U.S. goods
exports increased 33%, while imports rose 3.5%.
2. Bahrain( January 11, 2006) - All taris were removed. The U.S. increased exports in agriculture, nancial services,
telecommunications and other services.
3. Chile( January 1, 2004) -It eliminatedtaris, providedprotection for intellectual property, and requiredeective labor and
environmental enforcement, among other things. Unfortunately, trade decreased since 2004: U.S.exports to Chilefell26%(to
$8.8 billion), while imports dropped 29% (to $5.8 billion).
4. Colombia(October 21, 2011) - Tari reductions will expand exports of U.S. goods by at least $1.1 billion, andincrease U.S. GDP by
$2.5 billion.
5. Israel (1985) - Reduced tradebarriers and promotedregulatory transparency.
6. Jordan (December 17, 2001) -In addition to reducing trade barriers, the agreement specically removed barriers to U.S. meat
and poultry exports, and allowed increased imports ofagricultural imports from Jordan.

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7. Korea (March
15, 2012) - Nearly 80% of taris have been removed, ultimatelyboosting exports by $10 billion.

8. Morocco ( January 5, 2006) - Thegoods trade surplus roseup to $1.8 billion in 2011, up from just $79 million in 2005.
9. Oman ( January 1, 2009) - Discussions are underway to agree on the details of labor standards in Oman.
10. Panama (October 21, 2011) - Trade representatives arenegotiating labor and tax policies. The agreement will remove a 7%
average tari, with some taris as high as 81%, and others as high as 260%. See Panama Canal Impact on U.S. Economy
11. Peru (February 1, 2009) - Trade with Peru was $8.8 billion, with exports at $4.8 billion, the year the agreement was signed. The
FTA eliminated all taris, provided legal protections for investors and intellectual property, and was the rst to add protection
of labor and the environment.
12. Singapore ( January
1, 2004)- Trade totaled $37 billion in 2009, a 17% increase since the FTAs inception. Exports rose 31%, to
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$21.6 billion.

U.S. Economy

Multilateral Trade Agreements: Pros, Cons and Examples


The World's Largest Trade Agreements
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Thoas Kokta/Getty Images

By Kimberly Amadeo
Updated November 23, 2016

Denition: Multilateral trade agreements are commerce treaties between three or more nations. The agreements reduce taris and
make it easier for businesses to import and export. Since they are among many countries, they are dicultto negotiate. That same
broad scope makes them robustl once all parties sign.

Advantages
Multilateral agreements make all signatories treat each otherthe same. That means no country can give better trade deals to one
country than it does to another.
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