In recent years, there has been a decrease in the number of free trade agreements being established between countries. Free trade agreements are arrangements where two or more countries agree to reduce or eliminate barriers to trade between them. These barriers can include tariffs, quotas, and other restrictions that limit the flow of goods and services.
One of the reasons for the decrease in free trade agreements is the rise of protectionist policies. Protectionism is the economic doctrine that a country should protect its industries from foreign competition by taxing imports and exporting goods. This has become a popular policy in several countries, including the United States, where the current administration has implemented tariffs on imports from several countries, citing national security concerns.
Another reason for the decrease in free trade agreements is political instability. With countries becoming more inward-looking and focusing on domestic policies, the political will to negotiate trade agreements with other countries has decreased. This is especially true in Western countries, where the rise of populist movements has put pressure on governments to prioritize domestic policies over international trade.
The decrease in free trade agreements can have significant consequences for businesses. Without free trade agreements, businesses may face higher tariffs and other barriers to trade. This can increase the cost of doing business and make it more difficult for businesses to compete internationally.
There are, however, still some countries that are actively negotiating free trade agreements. For example, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was signed by 11 countries in March 2018, after the United States withdrew from the original Trans-Pacific Partnership (TPP) in 2017. The CPTPP reduces tariffs and other barriers to trade between these countries, promoting economic growth and creating new opportunities for businesses.
In conclusion, the decrease in free trade agreements can have significant consequences for businesses operating in an increasingly global economy. While protectionist policies and political instability have led to a decrease in the number of free trade agreements being established, there are still opportunities for businesses to take advantage of these agreements where they exist. As businesses navigate these challenges, it is essential to stay informed about changes in international trade policies and adjust their strategies accordingly.