International Trade and America's Place in the Global Economy - Trade Agreements

The U.S. government has long been part of free trade agreements with other individual countries (known as "bilateral" agreements) and with groups of countries (known as trading "blocs"). In this context, free trade means the ability to buy and sell goods across international borders with a minimum of tariffs or other interferences. Opponents to trading blocs argue that when countries with strong economies—like the United States, Japan, and the countries of the European Union—negotiate agreements, smaller nations with developing economies are left at an unfair disadvantage because they are excluded from the favorable terms of the agreement ("The Pros and Cons of Pursuing Free-Trade Agreements," Economic and Budget Issue Brief, Congressional Budget Office, July 31, 2003). Priorities regarding trade policy have shifted over the years according to the state of the economy. During the recession of the late 1970s, American producers called for the government to institute measures—such as high tariffs (fees charged to import goods into the country)—to protect them from international competition. During the growth period of the 1980s, however, the focus of companies turned to their own international expansion, and by the 1990s a push for free trade had gained increased momentum.