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International Trade Barriers

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b) Introduction of free trade and trade agreement
Another critical force of leading to globalization is the reduction of cross-border barriers. Trade is a particularly important element for transferring goods and services around the globe. Yet many countries set up restrictions to restrict the movement of goods to protect of their national interest. Measures such as imported quotas and tariffs are often imposed. The emergence of free trade zones and international organizations aim to reduce barriers through trade agreements.

The establishment of global trading blocks have reduced national barriers. The North American Free Trade Agreement (NAFTA) is an accord set up in January 1994 by three nations, including the United States, Canada and …show more content…

The East Asia region has become more trade cohesive with the development of trade agreements such as Association of Southeast Asian Nations (ASEAN) to promote international integration and trade cooperation. It consists of countries such as Malaysia, Singapore and Thailand. For instance, the ASEAN Free Trade Area is signed to support local manufacturing in all ASEAN nations. Primary goals are to enhance ASEAN competitive advantages in the global market by reducing tariff and non tariff barriers. It also tries to attract foreign investment to boost economic development. According to research published by the World Bank in 2008, ASEAN countries has reaped significant benefits investment and trade due to trade tariff reform. It states that the reduced tariff among ASEAN countries has increase the intra-regional trade by 2% with US $6.3 billion. …show more content…

There are two major non discrimination principles which are the Most favored nation (MFN) principle and national treatment principle. For MFN principle it tries to treat other WTO members equally by granting the best possible treatment to all trading partners, disregard of their economic size. For example, Country A has imposed 30% tariff on all imported steel products and after negotiation it decides to provide zero tariff only on goods imported from Country B. This then violated MFN principle and thus Country A has to extend its duty free access to all WTO members. All nations in WTO should be granted with the most favorable treatment so as to avoid

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