We explain what are the FTAs or Free Trade Agreements. Characteristics and importance. What advantages and disadvantages do they have?
What is TLC?
The acronym TLC means Free Trade Agreement. They are political-economic pacts between two or more nations , usually from a common region and shared interests, in which certain trade and social barriers are removed to meet the needs of all parties equally.
When two, three or more countries integrate a specific geographical enclave in continental or overseas areas, they tend to associate to collaborate in the benefits. As the modern world economy relies almost exclusively on trade in goods and services between countries, and tariffs, taxes and procedures abound in general terms, neighboring and friendly countries tear down these obstacles in order to establish better political ties .
Characteristics of an FTA
Some common features are:
- Provide for fair and undue economic competition from developing or smaller countries.
- Improve the legal and legal quality in the agreements between companies and take care of the vital rights of the producers.
- Stimulate investments and the promotion of national industries in each of the productive areas of each region.
- Create blocks and special commissions to solve conflicts of a social, environmental nature and of different evils that international relations entail.
These types of treaties are given throughout the world and allow not only the economic progress of nations, but also a continuous integration of the cultures , languages and characteristics of each people, with the purpose of generating a global conscience.
Importance of an FTA
The importance of the FTAs lies in the formation of a solid commercial structure that is beneficial for the development of the participating countries.
In accordance with the own policies of each country, in addition, sectors that previously could not boost their growth could be benefited, that is, they tended to disappear in the face of competition with large corporations.
Disadvantages of a FTA
One of the most proclaimed disadvantages of the FTAs is the attack they represent against certain types of products , since some of them are more sensitive and must be protected by laws before the advance of free trade.
What happens is that sometimes you end up importing a product that is manufactured in the same country . Some of the measures that can be taken are the moderate import restriction of these products and the promotion of competitive prices in the domestic market.