The advantage of these bilateral or regional agreements is to promote stronger trade between the parties to the agreement. They can also accelerate global trade liberalization when multilateral negotiations find themselves in trouble. Reluctant countries that are excluded from bilateral agreements and therefore do not participate in the increase in trade they involve may then be tasked with joining accession and removing their own trade barriers. Proponents of these agreements have called the process “competitive liberalization,” in which countries are challenged to reduce trade barriers in order to stay in touch with other countries. Thus, shortly after nafta was implemented, the EU sought and finally signed a free trade agreement with Mexico to ensure that European products were not at a competitive disadvantage in the Mexican market as a result of NAFTA. Two countries participate in bilateral agreements. Both countries agree to relax trade restrictions to expand business opportunities between them. They reduce tariffs and give themselves privileged trade status. In general, the point of friction is important national industries that are protected or subsidized by the state. In most countries, they are active in the automotive, oil and food industries. The Obama administration negotiated with the European Union the world`s largest bilateral agreement, the Transatlantic Trade and Investment Partnership. Thirty-one years after the publication of The Wealth of Nations, David Ricardo introduced a very important change in theory in his On the Principles of Political Economy and Taxation published in 1817. [3] Ricardo noted that trade between nations will take place, even if a country has an absolute advantage in the manufacture of all products marketed.

Access to other markets plays an important role in this business model, where comparative advantages can be created. In the absence of free trade, it is extremely costly for a government to subsidize a new entrant, as the subsidy must be relaxed, both to overcome the barriers of foreign trade and to stimulate the domestic producer. The WTO-U.S. free trade agreements also play an important role in establishing rules governing what a country can do in many areas to create comparative advantages; For example, the grant code limits the nature of the subsidies that governments can provide.