A trade agreement (also known as a pact or deal) is a wide-ranging tax, tariff and trade treaty that often includes protections for investments and intellectual property rights. The Office of USTR oversees advisory committees composed of business, agriculture, small-business and service industries, nongovernmental environmental and conservation groups, retailers, consumer interests, and state and local governments with expertise in trade policy issues.
Trade agreements can be either multilateral, negotiated at the World Trade Organization, or bilateral. Generally, multilateral agreements are more effective than bilateral ones in terms of their ability to open markets and reduce barriers to trade. Multilateral agreements, such as the General Agreement on Tariffs and Trade or the World Trade Organization’s rules of origin, provide a mechanism for the most-favored-nation status and national treatment of nontariff restrictions that would otherwise be difficult to achieve through bilateral negotiations.
While reducing tariffs is usually a key goal, most modern trade pacts are far more complex than simple free-trade deals. They typically address regulatory harmonization on issues such as labor and intellectual property regulations, rules governing digital trade, and economic security coordination. They also set standards on government procurement.
Many countries today are negotiating PTA networks that cover large geographic regions, such as the EU-Mercosur agreement. In addition to lowering tariffs, these agreements can help companies expand into new markets by simplifying the rules that apply to goods and services in those countries. They can also improve business competitiveness by removing obstacles to entry, such as behind-the-border regulations that can restrict market access, including competition policies and government procurement rules. These types of regional trade agreements are sometimes referred to as “deep” agreements.