What is Trade Agreement?

A trade agreement that is also known as the Trade Pact includes and covers investment, balance, and guarantees, it exists when two or more nations agree and make an agreement to run the trade practice between them, this trade agreement plays a critical role to enhance the trade practice between countries and help them to levy the complementary and give access to each other industries.

India in the global aspect had undergone many such agreements at the regional and global levels to increase its economic perspective.

Types of the Trade Agreement

There are certain types of trade agreements on the basis of economic conditions and those trade agreements are:-

Partial Scope Agreement

This agreement is not mentioned or defined under the WTO world trade organization, this agreement covers a small segment of products only and is limited in scope only.

Free Trade Agreement

This type of agreement is an agreement between two or more countries or nations in which the countries receive advantages in trade terms and other benefits. India has signed different trade agreements with a number of countries, such as Sri Lanka, and other economic chains such as ASEAN.

Customs Union 

A Custom union is an agreement between two or more countries to depreciate the trade obstacles between the countries forming an agreement, the imports from the nations that are not the member of the union are subject to the common tariff by the nation who are the member of the customs union.

Common market

The extension of the customs union is said to be a common union. In this union, there is a feature that allows the free movement of capital and labor between the members.

Economic Union 

This union consists of some trade groups that merge a single market with a single customs union. The members are free to do any kind of macroeconomic strategies and have a common policy for trade along with nonmembers.

One of the most well-known and established economic unions is The European Union (EU).

Benefits of Trade Agreements 

1. The Trade agreement removes misunderstandings and if any parties are found cheating then that particular member who cheated would be penalized 
2. These trade agreements also lead to long-term collaborations among the parties or the members.
3. Consumers are benefited as they get good quality products at lower rates and a variety of the products
4. Workers get high employment as well as good and satisfactory rates

The earnings of the producers are increased

The trade agreements create diagrams that help to ensure that how the members cooperate with each other to get the mutual benefits of trade and certain investments, all the duties and the tariffs that the nation impose on import and export are decided by the trade unions, each nation has a certain amount of advantages in the production of the goods, one country produces such good and the other countries is in need of that particular goods and thus through this agreement both the countries enjoy the benefits, these help in the export of the goods, import of the good, increase in economic scale, etc.

The Trade agreements focus on selling and producing the different goods that are used by the other member nation for whom such goods are not available. it improves the consumption and the production of the goods that are being traded at the international level, these agreement helps to boost the economy of the nation, also made it easier to run business across borders and also reduces trade barriers, it helps to create a specific bond among the countries and the monopolies are eliminated.

How Lead India Help You?

The experts of Lead India will help you to understand the policies and also assist you in drafting the agreement related to such trade practices.