The exception for the customs union was partly directed towards the creation of the European Economic Community (EC) in 1958. The COMMUNITY, originally made up of six European countries, is now known as the European Union (EU) and has twenty-seven European countries. The EU has gone beyond simply reducing barriers to trade between Member States and creating a customs union. It has moved towards even greater economic integration by becoming a common market – an agreement that removes obstacles to the mobility of factors of production such as capital and labour between participating countries. As a common market, the EU also coordinates and harmonises the fiscal, industrial and agricultural policies of each country. In addition, many EU members have created a single currency area by replacing their national currencies with the euro. However, these advantages must be offset by a disadvantage: by excluding certain countries, these agreements can transfer the composition of trade from low-priced countries that are not parties to the agreement to high-cost countries. Emerging countries are afraid of trade agreements with developed countries. They fear that the power imbalance will create a unilateral advantage for the developed nation. The third advantage is that it standardizes trade rules for all trading partners. Companies save legal fees because they follow the same rules for each country. On 7 December 2013, WTO representatives approved the so-called Bali package: all countries agreed to tighten customs standards and reduce bureaucracy in order to speed up trade flows.
Food security is a problem. India wants to subsidize food so that it can store it for distribution in case of famine. Other countries fear that India will dump cheap food on the world market in order to gain market share. This is what happened during the Great Depression. Countries have protected domestic jobs by raising import prices through tariffs. This trade centrism quickly brought down world trade as a whole, as countries followed one after the other. As a result, world trade collapsed by 65%. Discover more effects of the Great Depression. Despite the possible tensions between the two approaches, it would appear that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy. However, both the WTO and agreements such as NAFTA have become controversial among groups such as anti-globalization protesters, who argue that such agreements serve the interests of multinationals and not workers, while free trade is a proven method to improve economic performance and increase overall incomes. To accommodate this opposition, there has been pressure for labour and environmental standards to be included in these trade agreements. Labour standards contain provisions on minimum wages and working conditions, while environmental standards would prevent trade if there were fears of environmental damage.
While the GSP shows how successful unilateral trade agreements can be, unilateral trade policy also has drawbacks. For example, tariffs can be heavily advantageous or detrimental. Second, the details of the negotiations relate specifically to trade and commercial practices. The public often mistook. As a result, they receive a lot of press, controversies and protests. Over time, these benefits disappear. Then other countries take revenge and add their own tariffs. . . .