Agreement on Tariff: What it Means for Global Trade

The agreement on tariff refers to an agreement between countries to reduce or eliminate tariffs on goods traded between them. Tariffs are taxes imposed on imported goods, which can increase their prices and make them less competitive in the market compared to locally-produced goods.

The agreement on tariff is a crucial aspect of global trade because it promotes fair competition and helps to create a level playing field for all countries involved. It also enables countries to specialize in producing goods that they can produce most efficiently, which ultimately leads to increased productivity and economic growth.

The first significant agreement on tariff was the General Agreement on Tariffs and Trade (GATT), which was signed in 1947. The GATT was replaced by the World Trade Organization (WTO) in 1995, which currently oversees the implementation of trade agreements between countries.

One of the most significant agreements on tariff in recent times is the Trans-Pacific Partnership (TPP), which was signed by 12 countries in the Pacific region in 2015. The TPP aimed to eliminate tariffs on 98% of goods traded between the member countries, which would have created a massive free trade zone.

However, the United States, which was one of the signatories, withdrew from the agreement in 2017, leaving the remaining 11 countries to renegotiate the agreement, which resulted in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The CPTPP is a significant agreement on tariff because it promotes free trade between countries in the Asia-Pacific region, which includes some of the fastest-growing economies in the world such as Japan, Vietnam, and Malaysia. It is estimated that the agreement will eliminate tariffs on 95% of goods traded between the member countries, which will create new opportunities for businesses to expand their operations and increase their profits.

In conclusion, the agreement on tariff is an essential aspect of global trade, which enables countries to compete fairly in the global market. It promotes economic growth by allowing countries to specialize in producing goods that they can produce most efficiently. The CPTPP is the latest and most significant agreement on tariff, which will promote free trade between countries in the Asia-Pacific region and create new opportunities for businesses to succeed.