sep 182021

When the IMF was established, its main task was to provide short-term capital to support the balance of payments and to monitor fixed exchange rate agreements between countries, thus helping national governments control their exchange rates and prioritize economic growth. This aid should prevent the spread of international economic crises. The IMF was also created to rebuild the components of the international economy after the Great Depression and World War II. It has also sought to allocate capital investments to economic growth and infrastructure projects. A trade agreement (also known as a trade pact) is a large-scale fiscal, customs and trade agreement, which often contains investment guarantees. There are two or more countries that agree on terms that help them trade with each other. The most common trade agreements are the types of preferences and free trade concluded to reduce (or eliminate) tariffs, quotas and other trade restrictions for goods traded between signatories. As a general rule, the benefits and obligations of trade agreements apply only to their signatories. Once negotiated, multilateral agreements are very powerful. They cover a wider geographical area, which gives signatories a greater competitive advantage. All countries also give themselves most-favoured-nation status – they grant the best reciprocal trading conditions and the lowest tariffs. IMF member countries contribute to a pool from which they can borrow if they have balance of payments problems.

The reason for this agreement is that private international capital markets function imperfectly and many countries have limited access to financial markets. Without access to IMF funds, many countries can only correct large imbalances in external payments through drastic measures that can have adverse effects on their own economies and the world`s economies. The IMF provides countries in need with other sources of financing that would not otherwise be available to them. However, the WTO has raised some concerns. According to Pascal Lamy, Director-General of the WTO, the dissemination of regional trade agreements (SAAs) is ”. is the breeding of worry – concern about inconsistency, confusion, exponentially rising costs for businesses, unpredictability and even injustice in business relations. ”[2] The WTO is of the view that typical trade agreements (which the WTO describes as preferential or regional) are, to some extent, useful, but that it is much more advantageous to focus on global agreements within the WTO framework, such as the negotiations in the current Doha Round. Below is a map of the world with the biggest trade deals in 2018. Move the slider over each country for a rounded breakdown of imports, exports, and balances.

Trade agreements occur when two or more nations agree on trade terms between them. They determine the customs duties and customs duties imposed by countries on imports and exports. All trade agreements have an impact on international trade.

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