The Dominican Republic-Central America (CAFTA-DR) is a free trade agreement between the United States and the small central American economies. It is called El Salvador, Dominican Republic, Guatemala, Costa Rica, Nicaragua and Honduras. NAFTA replaced bilateral agreements with Canada and Mexico in 1994. The United States renegotiated nafta as part of the U.S.-Mexico agreement, which came into force in 2020. The GATT also allows free trade zones (FTA), such as the European Free Trade Area, which consists mainly of Scandinavian countries. Members of free trade agreements remove tariffs on trade with each other, while maintaining autonomy in setting tariffs with non-members. In the United States, the Office of Bilateral Trade Affairs minimizes trade deficits by negotiating free trade agreements with new countries, supporting and improving existing trade agreements, promoting economic development abroad and other measures. On 1 January 1948, the General Agreement on Tariffs and Trade came into force with 23 countries. These are the original 15, plus Myanmar, Sri Lanka, Chile, Lebanon, Norway, Pakistan, Southern Rhodesia and Syria. All unilateral trade restrictions have been lifted and the global economy has recovered. While virtually all economists believe that free trade is desirable, they do not agree on the best way to move from tariffs and quotas to free trade.
The three fundamental approaches to trade reform are one-sided, multilateral and bilateral. As a general rule, the benefits and obligations of trade agreements apply only to their signatories. While the GSP shows how successful trade agreements can be, unilateral trade policy also has drawbacks. Rates, for example, can be advantageous or unfavourable. Compared to multilateral trade agreements, bilateral trade agreements are easier to negotiate, since only two nations are parties to the agreement. Bilateral trade agreements are initiating and reaping trade benefits faster than multilateral agreements. Bilateral trade is the exchange of goods between two nations that promote trade and investment. Both countries will reduce or eliminate tariffs, import quotas, export restrictions and other trade barriers to promote trade and investment. Within the framework of the World Trade Organization, different types of agreements are concluded (most often in the case of new accessions), the terms of which apply to all WTO members on the most favoured basis (MFN), meaning that the advantageous conditions agreed bilaterally with a trading partner also apply to other WTO members. Despite the potential tensions between the two approaches, it appears that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy. However, both the WTO and agreements such as NAFTA are controversial among groups such as alter-globalists, who argue that such agreements serve the interests of multinationals and not workers, while free trade was a proven method of improving economic performance and increasing overall income.
To counter this opposition, pressure has been exerted for labour and environmental standards to be included in these trade agreements. Labour standards contain provisions relating to the minimum wage and working conditions, while environmental standards would prevent trade if there were fears of environmental damage. In principle, we can distinguish between unilateral trade agreements and systems (offered from one side to the other) and reciprocal trading systems (negotiated and approved by both parties).