Econ Essay Example | Topics and Well Written Essays - 250 words - 6

Econ - Essay ExampleSuch agreements become a hindrance to the free flow of goods causing global economic loss.In the current driving world, countries having wafer-thin comparative advantage suddenly lose the market to a rival who have entered into a PTA. The article 24 specifies that the external tariffs should not be raised when the PTA is functioning. This is precisely to prevent harm to nonmembers. During Mexican currency crisis of 1994, tariffs on 502 items were raised from 20 share to as high as 35 percent but at the same time tariffs on US and Canada, under NAFTA continued unchanged. Even small tariffs are likely to create trade digression when tariffs are nonexistent on members of PTA while they remain applicable on nonmembers. This trade diversion is against the very basic intent of Article 24.The basic mean of GATT was to encourage multilateral trade through reduced trade barriers. It aims at imposing the same tariff on goods regardless of which country supplies them and that purpose is not only defeated but restricts global economy to