Key Concepts and Summary
Trade policy is determined at many different levels: administrative agencies within government, laws passed by the legislature, regional negotiations between a small group of nations (sometimes just two), and global negotiations through the World Trade Organization. During the second half of the twentieth century, trade barriers have, in general, declined quite substantially in the United States economy and in the global economy. One reason why countries sign international trade agreements to commit themselves to free trade is to give themselves protection against their own special interests. When an industry lobbies for protection from foreign producers, politicians can point out that, because of the trade treaty, their hands are tied.
economic agreement between countries to allow free trade in goods, services, labor, and financial capital between members while having a common external trade policy
economic agreement between countries to allow free trade between members, a common external trade policy, and coordinated monetary and fiscal policies
free trade agreement
economic agreement between countries to allow free trade between members
General Agreement on Tariffs and Trade (GATT)
forum in which nations could come together to negotiate reductions in tariffs and other barriers to trade; the precursor to the World Trade Organization