WORLD REGIONS AND TRADE ORGANIZATIONS

African Growth and Opportunity Act (AGOA)

 Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad,
Comoros, Republic of Congo, Democratic Republic of Congo, Djibouti, Ethiopia, Gabon,
The Gambia, Ghana, Guniea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar,
Malawi, Mali, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome
and Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania,
Togo, Uganda, Zambia

 AGOA is a trade agreement born from the United States' desire to improve human rights and labor
laws in Sub-Saharan Africa. The agreement enhances trade by offering duty-free benefits for clothing,
shoes, wine, automotive components, agricultural products, certain chemicals, and steel. A business
like Dublin Horseshoe Company that is based in the AGOA region benefits from such an agreement
because it sells its product at a lower price due to the elimination of import taxes.

Asia Pacific Economic Cooperation (APEC)

 Australia, Brunei Darussalam, Canada, Chile, People's Republic of China, Hong Kong,
Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New
Guinea, Peru, Philippines, Russian Federation, Singapore, Taiwan, Thailand, United
States, Vietnam

Association of South East Asian Nations (ASEAN)

 Brunei Darussalam, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia,

Philippines, Singapore, Thailand, Vietnam

Central America-Dominican Republic Free Trade Agreement (CAFTA-DR)

 Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, United

States

Andean Community (CAN)

 Bolivia, Colombia, Ecuador, Peru

Caribbean Community and Common Market (CARICOM)

 Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti,
Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines,
Suriname, Trinidad and Tobago
Economic and Monetary Community of Central Africa (CEMAC)

 Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea,

Gabon

Commonwealth of Independent States (CIS)

 Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russian

Federation, Tajikistan, Turkmenistan, Ukraine, Uzbekistan

Common Market for Eastern and Southern Africa (COMESA)

 Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia,

Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland,
Uganda, Zambia, Zimbabwe

Economic Cooperation Organization (ECO)

 Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan,

Turkey, Turkmenistan, Uzbekistan

European Free Trade Association (EFTA)

 Iceland, Liechtenstein, Norway, Switzerland

European Union – 25 (EU-25)

 Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,

Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United Kingdom

European Union – 27 (EU-27)

 Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United
Kingdom

European Union – 28 (EU-28)

 Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg,
Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden,
United Kingdom
Free Trade Area of the Americas (FTAA)

 Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Canada,
Chile, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador,
Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama,
Paraguay, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines,
Suriname, Trinidad and Tobago, United States, Uruguay, Venezuela

Gulf Cooperation Council (GCC)

 Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates

Global System of Trade Preferences among Developing Countries (GSTP)

 Algeria, Argentina, Bangladesh, Benin, Bolivia, Brazil, Cameroon, Chile, Colombia,

Cuba, Democratic People's Republic of Korea, Ecuador, Egypt, Ghana, Guinea, Guyana,
India, Indonesia, Islamic Republic of Iran, Iraq, Libya, Malaysia, Mexico, Morocco,
Mozambique, Burma (Myanmar), Nicaragua, Nigeria, Pakistan, Paraguay, Peru,
Philippines, Republic of Korea, Singapore, Sri Lanka, Sudan, Thailand, Trinidad and
Tobago, Tunisia, United Republic of Tanzania, Uruguay, Venezuela, Vietnam,
Zimbabwe

Southern Common Market (MERCOSUR)

 Argentina, Brazil, Paraguay, Uruguay

North American Free Trade Agreement (NAFTA)

 Canada, Mexico, United States

Organization of the Petroleum Exporting Countries (OPEC)

 Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United
Arab Emirates, Venezuela

South Asian Association for Regional Cooperation (SAARC)

 Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka

South African Customs Union (SACU)

 Botswana, Lesotho, Namibia, South Africa, Swaziland

South African Development Community (SADC)

  Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi,
Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania,
Zambia, Zimbabwe

West African Economic and Monetary Union (UEMOA/WAEMU)

 Benin, Burkina Faso, Côte d'Ivoire, Guinea Bissau, Mali, Niger, Senegal, Togo

Free Trade Agreements, Their Impact, Types, and Examples

Trade agreements are when two or more nations agree on the terms of trade between them.
They determine the tariffs and duties that countries impose on imports and exports. All trade
agreements affect international trade.

Imports are goods and services produced in a foreign country and bought by domestic
residents. That includes anything shipped into the country even if it by the foreign subsidiary of
a domestic firm. If the consumer is inside the country's boundaries and the provider is outside,
then the good or service is an import.

Exports are goods and services that are made in a country and sold outside its borders.
That includes anything shipped from a domestic company to its foreign affiliate or branch.

Below you can see a world map with the largest trade agreements in 2018. Hover over each
country to get a rounded breakdown of imports, exports and balances in US$ millions.

Three Types of Trade Agreements

There are three types of trade agreements. The first is a unilateral trade agreement. It occurs
when a country imposes trade restrictions and no other country reciprocates.

A country can also unilaterally loosen trade restrictions, but that rarely happens. It would put
the country at a competitive disadvantage. The United States and other developed countries
only do this as a type of foreign aid. They want to help emerging markets strengthen strategic
industries that are too small to be a threat. It helps the emerging market's economy grow,
creating new markets for U.S. exporters.

Bilateral trade agreements are between two countries. Both countries agree to loosen trade
restrictions to expand business opportunities between them. They lower tariffs and confer
preferred trade status with each other. The sticking point usually centers around key protected
or subsidized domestic industries. For most countries, these are in the automotive, oil or food
production industries. The United States has 16 bilateral agreements. The Obama
administration was negotiating the world's largest bilateral agreement.
It was the Transatlantic Trade and Investment Partnership with the European Union.

Multilateral trade agreements are the most difficult to negotiate. These are among three
countries or more. The greater the number of participants, the more difficult the negotiations
are. They are also more complex than bilateral agreements. Each country has its own needs and
requests.

Once negotiated, multilateral agreements are very powerful. They cover a larger geographic
area. That confers a greater competitive advantage on the signatories. All countries also give
each other most favored nation status. They agree to treat each other equally.

The largest multilateral agreement is the North American Free Trade Agreement. It is between
the United States, Canada and Mexico. Their combined economic output is $20 trillion. NAFTA
quadrupled trade to $1.14 trillion in 2015. But it also cost between 500,000 to 750,000 U.S.
jobs. Most were in the manufacturing industry in California, New York, Michigan and Texas. For
more, see Pros and Cons of Free Trade Agreements.

The United States has one other multilateral regional trade agreement. The United States
negotiated the Central American-Dominican Republic Free Trade Agreement. It was with Costa
Rica, Dominican Republic, Guatemala, Honduras, Nicaragua, and El Salvador. It eliminated
tariffs on more than 80 percent of U.S. exports.

The Trans-Pacific Partnership would have replaced NAFTA as the world's largest agreement. In
2017, President Trump withdrew the United States from it.

Effects

There are pros and cons to trade agreements. By removing tariffs, they lower prices of imports.
Consumers benefits. But some domestic industries suffer. They can't compete with countries
that have a lower standard of living. As a result, they can go out of business and their
employees suffer. Trade agreements often force a trade-off between companies and
consumers.

On the other hand, some domestic industries benefit. They find new markets for their tariff-
free products. Those industries grow and hire more workers.

The Role of the WTO in Trade Agreements

Once agreements move beyond the regional level, they usually need help. The World Trade
Organization steps in at that point. It is an international body that helps negotiate global trade
agreements. Once in place, the WTO enforces the agreements and responds to complaints.
The WTO currently enforces the General Agreement on Tariffs and Trade. The world almost
received greater free trade from the next round, known as the Doha Round Trade Agreement. If
successful, Doha would have reduced tariffs across the board for all WTO members.

Unfortunately, the two most powerful economies refused to budge on a key sticking point.
Both the United States and the EU resisted lowering farm subsidies. These subsidies made their
food export prices lower than those in many emerging marketcountries. Low food prices would
have put many local farmers out of business. When that happens, they must look for jobs in
congested urban areas. The U.S. and EU refusals to cut subsidies doomed the Doha round. It is a
thorn in the side of all future world multilateral trade agreements.

The failure of Doha allowed China to gain a global trade foothold. It has signed bilateral trade
agreements with dozens of countries in Africa, Asia, and Latin America. Chinese companies
receive rights to develop the country's oil and other commodities. In return, China provides
loans and technical or business support.

Most Favored Nation Status

Most Favored Nation status is an economic position in which a country enjoys the best trade
terms given by its trading partner. That means it receives the lowest tariffs, the fewest trade
barriers, and the highest import quotas (or none at all). In other words, all Most Favored Nation
trade partners must be treated equally.

The Most Favored Nation clause in the two countries' free trade agreements confers that
status. That clause is also used in loan agreements and commercial transactions. In the former,
it means that interest rates on a subsequent loan won't be lower than on the primary one. In
the latter, it means the seller won't offer a better deal to another buyer.

Advantages

MFN status is critically important for smaller and developing countries for several reasons. It
gives them access to the larger market. It lowers the cost of their exports since trade barriers
are the lowest given. That makes their products more competitive.

The country's industries have a chance to improve their products as they service this large
market. Their companies will grow to meet increased demand. They receive the benefits
of economies of scale. That, in turn, increases their exports and their country's economic
growth.
It also cuts down on red tape. Different tariffs and customs don't have to be calculated for each
import since they are all the same.

Best of all, it reduces the ill effects of trade protectionism. Even though domestic industries
may not like to lose their protected status, they will become healthier and more competitive as
a result.

Disadvantages

The downside of Most Favored Nation status is the country must also grant the same to all
other members of the agreement or the World Trade Organization. This means they cannot
protect their country's industries from cheaper goods produced by foreign countries. Some
industries get wiped out because they just can't compete. It’s one of the disadvantages of free
trade agreements

Without tariffs, sometimes countries subsidize their domestic industries. That allows them to
export them for incredibly cheap prices. This unfair practice will put companies out of business
in the trade partner's country. Once that happens, the country reduces the subsidy, prices rise,
but now there's a monopoly. This practice is known as dumping. This can get a country in
trouble with the WTO.

Many countries were excited to get Most Favored Nation Status, so they could export goods
cheaply to the U.S. market, only to find they lost their local agricultural industry. Local farmers
could not compete with subsidized U.S. and the European Union food. Many farmers had to
move to the cities to find jobs. Then, when food prices escalated thanks
to commodities traders, there were food riots.

Examples

All 159 members of the WTO receive the Most Favored Nation status. That means they all
receive the same trade benefits as all other members.

The only exceptions are developing countries, regional trade areas, and customs unions.
Developing countries receive preferential treatment without having to return it, so their
economies can grow. That is in the best interest of the developed countries in the long run.
Consumer demand for imports will grow along with these economies. That provides a bigger
market for the developed countries' products.

The United States has reciprocal Most Favored Nation Status with all WTO members. That
means 37 countries are left out. None of these countries has bilateral trade agreements with
the United States.

The General Agreement on Trade and Tariffs was the first multilateral trade agreement to
bestow Most Favored Nation status.

China

The United States gave Most Favored Nation status to China in 2000. Soon afterward, it helped
the country become a WTO member. U.S. companies wanted to sell to the largest population in
the world. As China's GDP per capita grew, so would its consumer spending.

That didn't reap the bonanza U.S. companies had hoped for. First, the Chinese don't receive
Social Security or other entitlement programs. As a result, they frantically save each and every
penny to have enough for their old age.

Second, the Chinese government does not allow companies to sell products to its people
without paying a price. To gain entry to China's market, exporters must build plants and hire
Chinese workers. That grants Chinese companies knowledge of how the products are made. As
a result, there are often cheap local knock-offs of the products. The U.S. company can't
compete, and eventually packs up and goes home. In 2018, the Trump administration began
negotiating with China to change that requirement. He threatened tariffs if they resisted
compliance.

The World Trade Organization and How It Works

The World Trade Organization is a global membership group that promotes and manages free
trade. It does this in three ways. First, it administers existing multilateral trade agreements.
Every member receives Most Favored Nation Trading Status. That means they automatically
receive lowered tariffs for their exports.
Second, it settles trade disputes. Most conflicts occur when one member accuses another
of dumping. That's when it exports goods at a lower price than it costs to produce it.
The WTO staff investigates, and if a violation has occurred, the WTO will levy sanctions.

Third, it manages ongoing negotiations for new trade agreements. The biggest would have
been the Doha round in 2006. That would have eased trade among all members. It emphasized
expanding growth for developing countries.

Since then, countries have negotiated their own trade agreements. The two largest are:

1. The Trans-Pacific Partnership links the United States and 11 other countries bordering
the Pacific Ocean. It includes Japan, Australia, and Chile, but excludes China and Russia.
In 2017, President Trump withdrew the United States from the TPP. But the other
countries are moving forward with their own agreement.
2. The Transatlantic Trade and Investment Partnership links two of the world's largest
economies, the United States and the European Union. If successful, it would quadruple
trade between them to four trillion dollars. President Trump has not moved forward
with negotiations.

Nairobi Package

The success of these deals reinvigorated WTO efforts for a deal for all its members.
On December 19, 2015, the WTO took steps to help its poorest members. Members agreed to
end agricultural export subsidies. Developed countries will do so immediately, emerging
markets will do so by 2018, and poor nations will have much longer. Countries that subsidize
their farming industries undercut local farmers in underdeveloped countries. When trade deals
are signed, the local farmers are put out of business.

That happened in Mexico after NAFTA.

Members governments are allowed to stockpile food in case of famine. This issue came up
because India refused to give up its food security program. India wants to continue paying
its farmers above-market prices so it can sell subsidized food to its poor. They agreed to find a
solution in 2017. But these food security programs violate the WTO's membership agreement.
Major information technology exporters agreed to eliminate tariffs on 201 IT products valued at
over $1.3 trillion per year. The next step is to work on a schedule.

Bali Package

On December 7, 2013, WTO negotiators concluded a four-day meeting in Bali, Indonesia. They
agreed to streamline customs for all members. Once ratified, the Bali package would add
$1 trillion to global trade and create 18 million jobs. Below are the deal's five components:

1. Trade Facilitation: The aim is to simplify customs procedures to speed shipping,

reduce bureaucracy and corruption, and clarify rules for goods being shipped through
ports by other countries. The WTO will assist developing countries update their
technology and train customs officials.
2. Development: The WTO aims to grant developing countries greater access to developed
markets
3. Food Security: The WTO temporarily allows poor countries to stockpile as much food as
needed to get them through famines. The aim here is to find a long-term solution so
that these countries don't abuse the practice and distort the free market price of food.

1. Cotton: Quotas on cotton imports (by developed countries) will be removed, along with
deep subsidies (from emerging market countries). The specific amount of subsidy was
negotiated during the Nairobi Round.
2. Agriculture: The WTO generally aims to reduce export subsidies and obstacles to trade.

The Bali package has been inserted into the WTO Membership Protocol. More than 50
members have ratified it, but that's nowhere near the two-thirds needed.

WTO History

The WTO's origins began with trade negotiations after World War II. In 1948, the General
Agreement on Tariffs and Trade focused on reducing tariffs, anti-dumping, and non-tariff
measures. From 1986 to 1994, the Uruguay round of negotiations led to the formal creation of
the WTO.

In 1997, the WTO brokered agreements promoting trade in telecommunications services

among 69 countries. It also removed tariffs on information technology products between 40
members. It improved trade of banking, insurance, securities and financial information
between 70 countries.

The Doha round began in 2000. It focused on improving trade in agriculture and services and
expanded to include emerging mark, including countries at the fourth WTO Ministerial
Conference in Doha, Qatar, in November 2001. Unfortunately, the Doha talks collapsed in
Cancun, Mexico, in 2003. A second attempt also failed in 2008 at Geneva, Switzerland.

INTEGRITY PACTS

Each year, governments spend huge sums of money on public procurement – funding roads,
bridges, schools, housing, water and power supply, other community improvements… But with
these vast expenditures, opportunities for corruption are rife.

Integrity Pacts were developed as a tool for preventing corruption in public contracting. An
Integrity Pact is both a signed document and approach to public contracting which commits a
contracting authority and bidders to comply with best practice and maximum transparency. A
third actor, usually a civil society organisation (often one of our chapters), monitors the process
and commitments made. Monitors commit to maximum transparency and all monitoring
reports and results are made available to the public on an ongoing basis.

Integrity Pacts have been around since the 1990s, and have been applied in more than 15
countries and 300 separate situations. They help save taxpayer money, ensure that
infrastructure projects and other public works are delivered efficiently, and close off avenues
for illicit gain. An update to the Integrity Pact concept in 2016 has seen it draw on major
advances in the areas of technology and civic participation.

The Integrity Pact is co-created by TI national chapters, or other civil society partners, and
government officials responsible for a particular procurement process. Its clauses are drawn
from both international open contracting principles as well as the local legal and social
context. In this way the tool is constantly evolving based on lessons learned and best practice
around the world as well as up-to-date analysis regarding the country and sector's corruption
risk profile. In this way, the Integrity Pact avoids being a one-size fits all approach but rather a
living tool that adapts to local opportunities and challenges.

EXAMPLES OF INTEGRITY PACTS

A few examples of Integrity Pacts include:

In 2016, Transparency International together with 11 national chapters in the EU and four
additional civil society partners embarked on a process to apply the updated clean contracting
approach. Involving just short of EUR 1 billion of funding, this pilot incorporates projects across
 the spectrum from flood protection to road building to tram construction. First results are
expected in 2017. Learn more about the project here.

Since 2002, our chapter in Mexico has implemented pacts in over 100 contracts worth US$ 30
billion. It has also emphasised the use of independent monitors, dubbed ‘social witnesses’, and
since 2004 the country’s Public Administration Authority has made social witnesses mandatory
for public contracts above a certain threshold.

 In 2013, Transparency International's partner in Honduras exposed massive corruption in the

purchase, sales and distribution of medicines to state hospitals that was endangering the lives
of untold numbers of Hondurans. As a result, an Integrity Pact was signed with the Ministry of
Health and with major pharmaceutical companies to monitor the purchase and supply of
medicines in the country. This IP came into force in 2017. As part of the IP, individual Ministry
of Health employees and external actors that provide services to the Ministry, such
as the College of Chemists and Pharmacists of Honduras and Banco de Occidente, have signed
an ethics statement. The IP has already lead to increased access to information, and increased
compliance with open data principles.
BENEFITS OF INTEGRITY PACTS

While Integrity Pacts help ensure clean operations on the part of contractors and public officials
during the execution of a project, they also yield other benefits. Integrity Pacts provide
enhanced access to information, increasing the level of transparency in public contracts. This, in
turn, leads to greater confidence and trust in public decision-making, less litigation over
procurement processes and more bidders competing for contracts.

Integrity pacts can also encourage institutional changes, such as increased commitment to
making data available in a truly open format, simplified administrative procedures and
improved regulatory action.