Multilateral Trade Agreements

Definition

Multilateral Trade Agreements involve three or more countries agreeing on terms to conduct trade, often by reducing tariffs and import quotas.

Analogy

Consider multilateral agreements as being similar to a school project where multiple students work together, sharing resources and ideas equally so everyone benefits from the collective effort.

Related terms

World Trade Organization (WTO): An international organization designed to supervise and liberalize international trade. It’s like the teacher overseeing the school project, ensuring everyone plays fair.

Non-Tariff Barriers (NTBs): These are restrictions on imports or exports such as quotas, embargoes, sanctions, levies except regular customs duties. NTBs are like rules set by parents about how many sweets you can eat in a day - they limit your consumption.

Trade Liberalization: The removal or reduction of restrictions or barriers on the free exchange of goods between nations. It's like removing the rule that you can only play with your toys at home, allowing you to take them anywhere and share with anyone.