Thanks to the trade barriers described previously, buying imported goods has often been much more expensive and difficult than buying domestic goods. During the 1990s, however, the regulations governing global trade were transformed.
The most significant change was that 124 countries agreed to adopt the General Agreement on Tariffs and Trade (GATT). GATT, which existed from 1947 to 1995, was an agreement to regulate trade among (eventually) more than 120 countries, the purpose of which was “substantial reduction of tariffs and other trade barriers and the elimination of preferences.”
Today, the WTO and its member countries are negotiating what’s known as the Doha Round, which seeks to advance trade opportunities for developing countries in areas ranging from agriculture to services to intellectual property rights. The WTO, headquartered in Geneva, Switzerland, administers trade agreements, provides a forum for trade negotiations, handles trade disputes, monitors national trade policies, and offers technical assistance and training for developing countries for its 164 member countries.
In 1992, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom adopted the Maastricht Treaty of Europe. The purpose of this treaty was to transform their 12 different economies and 12 currencies into one common economic market, called the European Union (EU), with one common currency.
NAFTA, the North American Free Trade Agreement among the United States, Canada, and Mexico, went into effect on January 1, 1994. More than any other regional trade agreement, NAFTA has liberalized trade between countries so that businesses can plan for one market (North America) rather than for three separate markets. One of NAFTA’s most important achievements was to eliminate most product tariffs and prevent the three countries from increasing existing tariffs or introducing new ones.
Overall, Mexican and Canadian exports to the United States are up 637 percent and 151 percent, respectively, since NAFTA went into effect. U.S. exports to Mexico and Canada are up 455 percent and 166 percent, growing twice as fast as U.S. exports to any other part of the world. In fact, Mexico and Canada now account for 34 percent of all U.S. exports.
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