On behalf of the EU, the Commission negotiates and implements bilateral trade agreements with third countries. The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs is responsible for negotiating and implementing preferential trade regimes for processed agricultural products (PPPs). It also seems likely that the US would also seek to renegotiate the US-Korea Free Trade Agreement (KORUS) adopted in 2012 as part of a similar process. Last week in Seoul, Vice President Mike Pence told a group of business leaders that the U.S.-South Korea trade relationship needs to change because U.S. companies “face too many barriers to entry, which tilts the scales against American workers,” according to the Financial Times. Asia Pacific “is an important market for our businesses,” said Rob Mulligan, senior vice president of policy and government affairs at the United States Council for International Business. “We hope that [the U.S.] will take a different approach that will continue to open up these markets and ensure that U.S. companies are able to compete and have access to these markets. The multilateral approach, so we usually had the advantage of being able to get several countries at the same time. Many U.S. companies benefit from the rules-based global trading system. Multilateral agreements also have their opponents.
The reasons why they do not bring lasting benefits to these agreements are as follows: the biggest disadvantage of multilateral agreements is that they are complex. The details of the negotiation are specific to business and commercial practices. This means that the public often misunderstands them. Therefore, they receive a lot of controversy and protests. Another disadvantage is that with the disappearance of trade barriers, small companies cannot compete with large multinationals. They often lay off workers to save costs. Others move their company to a participating country where wages are low. Bilateral free trade agreements became popular in the early 2000s.
The Howard administration has begun FTA talks with eight trading partners, three of which were completed during their tenure. Bilateral trade agreements pose some problems, says Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics. “First, bilateral agreements take a lot of time, and probably more time [in this case], because the Trump administration`s demands are significantly higher than in previous free trade agreements. They want other countries to give and give until they have given everything – and more demands mean more negotiation time. In addition, any new bilateral agreement must be ratified by the U.S. Congress. They use a very valuable asset – this is the time of Congress for the ratification process. They take time, and you have to massage Congress. Some regional trade agreements are multilateral.
The most important was the North American Free Trade Agreement (NAFTA), which was ratified on January 1, 1994. NAFTA quadrupled trade between the United States, Canada and Mexico from 1993 to 2018. On July 1, 2020, the USMCA AGREEMENT (USMCA) between the United States, Mexico and Canada (USMCA). The USMCA was a new trade deal between the three countries negotiated under President Donald Trump. Nevertheless, they face their own challenges. Power asymmetries within regions are often pronounced and lead to agreements that favour the larger member at the expense of smaller partners. They also carry the risk of “balkanizing” the global trading system by dividing the global economy into competing trading blocs. But Australia already has a lot of trade on its plate. It participates in the ongoing World Trade Organization (WTO) Doha Round negotiations and is a party to the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) negotiations in Asia. Trade regionalism increased in the 1990s with the formation of the Mercosur Bloc (1991), the ASEAN Free Trade Area (1992) and NAFTA (1994). One trick China did before joining the WTO is that it used coalition negotiations to define its status as a developing country and unfairly grant itself certain advantages.
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