The world is ever changing and how its countries interact with one another is no exception. The rules and limits that govern economies affect their trade among one another. As is implied, trade restrictions are policies that restrict trade. However, trade allows for specialization and gain to all parties involved, so even though legislation that restricts trade may be implemented with good intentions, such as helping the domestic market, it actually harms economies in the end. History has proven this to be the case, so many countries have taken actions to remove harmful trade restrictions and to prevent them from returning in the future.
The first move followed World War II. It was an organization that was formed to set the rules for the conduct of international trade and to reduce the trade barriers among nations. It was known as the General Agreement on Tariffs and Trade, also referred to as GATT. It played a huge role in reducing tariffs and relaxing quotas. To better illustrate this statement, after the enforcement of the General Agreement on Tariffs and Trade, tariff rates fell from forty percent in 1947 to three and a half percent in 2006. That’s quite an achievement. However, the General Agreement on Tariffs and Trade later became known as the World Trade Organization (WTO) in 1944. The World Trade Organization is currently in charge of monitoring and enforcing multilateral trade agreements among its 151member countries. It is responsible for offering a forum for development of trade rules and the settlement of disputes among its members.
The next and probably most well-known trade agreement is the North American Free Trade Agreement, or NAFTA. It is the comprehensive trade agreement between the United States, Mexico, and Canada that was formed in 1994 and imposed tariffs that were supposed to continue until 2004. It is eventually mean to remove restrictions on financial investments, liberalize trade in services such as banking, and establish uniform legal requirements for the protection of intellectual property.
Global trade has greatly changed throughout the years. These moves are just a few of the measures taken to remove trade restrictions that are detrimental to trade and the world’s economies. Removing trade restrictions is the future of free, global trade, which will cause economies to become more efficient and to grow and prosper, creating more wealth and raising the standard of living, which is what all countries ultimately strive for.