Trade Agreement

A trade agreement, also known as a trade pact, is any contractual agreement between states concerning their trade relationships. It is a way to reduce barriers, thereby opening all parties to the benefits of increased trade, and are often politically contentious since they may change economic customs and deepen interdependence with trade partners. A product of negotiations between two or more sovereign nations, these agreements may be bilateral or multilateral, and as soon as the potential for trade between two countries is evident, trade negotiations usually begin. Some common features of trade agreements include reciprocity, a most-favoured-nation clause, and a national treatment of non tariff barriers.