Developing countries need a shot at going big, and a trade agreement might just provide that. Some people believe that trade agreements are beneficial for developed countries but little did they miss out on the opportunities it creates for underdeveloped nations. The smaller republics have a scarcity of resources; hence they can not score favorable trade agreements. These less established countries are often rich in a few and poor in the rest when it comes to capitals. A positive trade agreement can change the fate of a nation, and aid the economy of those countries to grow faster. It could lead to the two most positive outcomes; that is, relaxation in sanctions and agreements of foreign aid.
There are two prime categories of trade agreements at the international level:
Regional Agreements – A group of countries sit together and formulate an agreement for the common good. There are many trade unions in different continents that are articulating these contracts to benefit its members. The EU and World Trade Organization are the biggest examples of this nature.
Bilateral Agreements – This type of trading treaty is signed by two countries. It charts down the rules and regulations which both countries will abide by. This bi-national settlement is always constructive for both countries.
An under-developed country, if pursuing trade agreements keenly, often land on bilateral and investment agreements with neighboring countries. These trade agreements prove profitable to both the countries, and the deal does not need to be made with only a developed country necessarily. The trade agreements can form between two less-developed nations. It provides a better quality of life for the parties involved in the trade agreements. These arrangements are extremely efficient and provide better economic resources, increased production capabilities, and improved foreign relations. Both
The countries in the developmental stage often have a lesser standard of living or quality of life than the developed world. If the Government proves to be strategic, they register with memberships of worldwide schemes, such as ECOTA, SAARC, and SAFTA. These mutually beneficial trade unions ensure the manufacturing, buying, selling favorable across the board. They often form a free trade area; consequently, it enhances the level of economic growth.
When a trade agreement lowers the border difficulties and trade barriers, it does not only prove efficient for the governments but the population as well. The end consumer takes great benefit from the variety of goods available in markets. Quality products are ensured, and even lower prices can come into play after a good business agreement among different nations.
Trade agreements provide an effective balance for developing nations, and the overall economic operations are improved. The growing industries of a less-developed country see a burgeoning rise of demand if they can export their merchandise to other countries. Those factories will be given assurance of a better business opportunity by the contracts among governments. This creates an opportunity for the local industry to grow and hire more employees to meet business needs. Lower the tariffs are, lower the costs will be; resultantly, the well being of those nations will improve.