The G-3 was a free trade agreement between Colombia, Mexico, and Venezuela that came into effect on January 1st, 1995, which created an extended market of 149 million consumers with a combined GDP (Gross domestic product) of US $486.5 billion. The agreement states a ten percent tariff reduction for 10 years (starting in 1995) for the business of goods and services among its members. The deal is a third-generation one, not limited to liberalizing business but includes issues for example investment, services, government purchases, regulations to fight illegal competition, and intellectual property rights. Venezuelan President Hugo Chávez stated in May 2006 that his country would withdraw from the business bloc, due to differences between its partners. In April, Venezuela had also stated its plans to leave the Andean Community, after Colombia and Peru reached free business agreements with the United States and Ecuador kept accommodations for one. Venezuela also joined Mercosur, while Mexico and Colombia innovated the Pacific Alliance along with Peru and Chile.
History of the trade agreements
Since the mid-1980s Latin American and Caribbean countries have unilaterally liberalized their agriculture and have started a new surge of profitable integration that led to the establishment of 25 business agreements between 1990 and 1994. The Group of Three(G-3) Free Trade Agreement, comprising Colombia, Mexico, and Venezuela, offered for the liberalization of around 62 percent of exportables from Colombia and Venezuela and 16 percent of those from Mexico, the major size of pre-agreement trade, and the size of the markets involved, the most important recent developments in G-3 member countries’ agricultural programs are described. Also, the general characteristics of the agreement are presented, giving special emphasis to the agricultural vittles. Eventually, a qualitative assessment of the ultimate is done through their academic operation to the current structure of agricultural business among member countries
Types of trade agreements
They are generally unilateral, bilateral, or multilateral.
Unilateral
These happen when a country imposes business restrictions and no other country reciprocates. A country can also unilaterally loosen business restrictions, but that infrequently happens because it would put the country at a competitive disadvantage. The United States and other advanced countries only do this as a type of foreign aid to help to raise the market and strengthen the strategic industry that is too small to be a risk. It helps the arising market economy grow, creating new markets for U.S. exporters.
Bilateral
Bilateral agreements involve two countries. Both countries agree to loosen business restrictions to expand business openings between them. They lower tariffs and confer favored business status on each other. The sticking point generally centers around key defended or government-subsidized domestic industry. For many countries, these are in the automotive, oil painting, or food products industries. The Transatlantic Trade and Investment Partnership, the largest bilateral agreement in the world, was being negotiated by the Obama administration with the European Union, but under the Trump administration, these talks came to a standstill.
Multilateral
These agreements among three countries or further are the most delicate to negotiate. The more the number of participants, the more delicate the accommodations are. By nature, they’re more complex than bilateral agreements, as each country has its requirements and markets. Once negotiated, multilateral agreements are very important. They cover a larger geographic area, which confers a lesser competitive advantage on the signatories. All countries also give each other the most favored nation status granting unique collective business terms and the smallest tariff.
The outcome of trade agreements
There are pros and cons to business agreements. By removing tariffs, they lower the prices of significance and consumers’ profit. Still, some domestic industry suffers. They cannot contend with countries that have a lower standard of living. As a result, they can go out of business and their workers suffer. Business agreements frequently force a trade-off between companies and consumers. On the other hand, some domestic industries profit. They find new markets for their tariff-free products. That industry grows and hires further workers.
Take away
Free trade allows for the unrestricted import and import of goods and services between two or further countries. Business agreements assume three different types unilateral, bilateral, and multilateral to negotiate global trade agreements.
