Trade Agreements: Their Impact, Types, and Examples

Trade agreements occur when two or more nations agree on the terms of trade between them.
They determine the tariffs and duties that countries impose on imports and exports. All trade
agreements affect international trade.
Definitions
Imports are goods and services produced in a foreign country and bought by domestic residents.
That includes anything shipped into the country even if it's by the foreign subsidiary of a
domestic firm. If the consumer is inside the country's boundaries and the provider is outside, then
the good or service is an import.
Exports are goods and services that are made in a country and sold outside its borders.
That includes anything shipped from a domestic company to its foreign affiliate or branch.

3 Types of Trade Agreements

Trade agreements are usually unilateral, bilateral, or multilateral.
Unilateral Trade Agreement
These occur when a country imposes trade restrictions and no other country reciprocates. A
country can also unilaterally loosen trade restrictions, but that rarely happens because it would
put the country at a competitive disadvantage. The United States and other developed countries
only do this as a type of foreign aid in order to help emerging markets strengthen strategic
industries that are too small to be a threat. It helps the emerging market's economy grow, creating
new markets for U.S. exporters.1
Bilateral Trade Agreements
Bilateral agreements involve two countries. Both countries agree to loosen trade restrictions to
expand business opportunities between them. They lower tariffs and confer preferred trade status
on each other. The sticking point usually centers on key protected or government-subsidized
domestic industries. For most countries, these are in the automotive, oil, or food production
industries. The Obama administration was negotiating the world's largest bilateral agreement,
the Transatlantic Trade and Investment Partnership with the European Union, but this stalled
under the Trump administration.
Multilateral Trade Agreements
These agreements among three countries or more are the most difficult to negotiate. The greater
the number of participants, the more difficult the negotiations are. By nature, they are more
complex than bilateral agreements, as each country has its own needs and requests.
Once negotiated, multilateral agreements are very powerful. They cover a larger geographic area,
which confers a greater competitive advantage on the signatories. All countries also give each
other most-favored-nation status—granting the best mutual trade terms and lowest tariff.
Over the agreement's first two decades, regional trade increased from roughly $290 billion in
1993 to more than $1.1 trillion by 2016. Critics disagree about the net impact on the U.S.
economy, but some estimates put the net domestic job losses due to the agreement at 15,000 per
year.
The United States has one other multilateral regional trade agreement: the Dominican Republic-
Central America FTA (CAFTA-DR). This arrangement with Costa Rica, the Dominican
Republic, El Salvador, Guatemala, Honduras, and Nicaragua eliminated tariffs on more than
80% of U.S. non-textile manufactured goods exports.
The Trans-Pacific Partnership would have replaced the USMCA as the world's largest
agreement. In 2017, President Donald Trump withdrew the United States from the agreement.
It's expected that President Biden may attempt to negotiate a way for the U.S. to rejoin.
All told, the U.S. currently has 14 trade agreements involving 20 different countries.
The Role of the WTO in Trade Agreements
Once agreements move beyond the regional level, they need help. The World Trade
Organization steps in at that point. This international body helps negotiate and enforce global
trade agreements.
The world almost received greater free trade from the next round, known as the Doha Round
Trade Agreement. If successful, Doha would have reduced tariffs across the board for all WTO
members.

Doha round talks were on and off for over a decade, and the reasons for their failure are
complex. Many of the issues hinged on the two most powerful economies—the U.S. and the EU.
Both resisted lowering farm subsidies, which would have made their food export prices lower
than those in many emerging market countries. Low food prices would have put many local
farmers out of business. The U.S. and EU refusals to cut subsidies, among other issues, doomed
the Doha round.
The failure of Doha allowed China to gain a global trade foothold. It has signed bilateral trade
agreements with dozens of countries in Africa, Asia, and Latin America. Chinese companies
receive rights to develop the country's oil and other commodities. In return, China provides loans
and technical or business support.
Effects of Trade Agreements
There are pros and cons to trade agreements. By removing tariffs, they lower prices of imports
and consumers benefit. However, some domestic industries suffer. They can't compete with
countries that have a lower standard of living. As a result, they can go out of business and their
employees suffer. Trade agreements often force a trade-off between companies and consumers.
On the other hand, some domestic industries benefit. They find new markets for their tariff-free
products. Those industries grow and hire more workers. These trade-offs are the subject of
endless debate among economists.

Trade Agreement
Pakistan and the United States began negotiating a Bilateral Investment Treaty (BIT) in 2004 and
closed the text in 2012, but the agreement has not been signed due to reservations from Pakistani
stakeholders. Pakistan has bilateral investment agreements with Australia, Azerbaijan, Mauritius,
Bahrain, Bangladesh, Morocco, Belarus, Netherlands, Belgo-Luxemburg Economic Union,
Oman, Philippines, Bosnia, Portugal, Bulgaria, Qatar, Cambodia, Romania, China, Singapore,
Czech Republic, South Korea, Denmark, Spain, Egypt, Sri Lanka, France, Sweden, Germany,
Switzerland, Indonesia, Syria, Iran, Tajikistan, Italy, Tunisia, Japan, Turkey, Kazakhstan,
Turkmenistan, Kuwait, U.A.E, Kyrgyz Republic, United Kingdom, Lebanon, Uzbekistan, Laos
and Yemen. These investment treaties generally include dispute settlement provisions.

If a dispute cannot be settled through mutual consultation, investors can generally take cases to
arbitration under rules of the U.N. Commission on International Trade Law, the World Bank’s
International Center for Settlement of Investment Disputes, or to the Court of Arbitration of the
International Chamber of Commerce. Pakistan is a member of the Multilateral Investment
Guarantee Agency (MIGA), an arm of the World Bank.
Pakistan and the United States signed a Trade and Investment Framework Agreement (TIFA) in
2003, which provides a forum for discussion of bilateral trade issues. The most recent TIFA
intercessional meeting was held in Islamabad in May 2019.

Pakistan has free trade agreements with Sri Lanka, China, and Malaysia. Pakistan is also a part
of the South Asian Association for Regional Cooperation (SAARC) and has preferential trade
agreements with Iran, Indonesia, and Mauritius.

The United States and Pakistan have had a bilateral tax treaty in force since 1959. Pakistan also
has double taxation agreements with Austria, Canada, Germany, Indonesia, Italy, Lebanon,
Mauritius, Poland, Switzerland, Turkmenistan, Kazakhstan, the United Arab Emirates, Belgium,
China, France, Greece, Iran, Japan, Libya, Saudi Arabia, Romania, Sweden, Belarus, Hungary,
Jordan, Kenya, Kuwait, Malaysia, Netherlands, Nigeria, Norway, Oman, Philippines, Qatar,
South Africa, Syria, Tunisia, Uzbekistan, the United Kingdom, Bangladesh, Denmark, Finland,
India, Ireland, South Korea, Malta, Singapore, Sri Lanka, Thailand, Azerbaijan, and Turkey.

Developing a business strategy in 10 steps

It doesn’t have to be that way. Here are 10 steps you can take to build the best business strategies
and execute them with precision:
1. Develop a true vision.
Vision is an abstract word that means different things to different people. Classically, a vision or
vision statement is a snapshot into the future. It should include aspirations of what type of
company you want to be, and, unlike a mission statement, articulates what success looks like in
clear terms (customers, markets, volume, etc.).
2. Define competitive advantage.
At the essence of strategy is identifying how a company can deliver unique value to its
customers. In many sectors of the economy, companies are stuck in a sea of sameness. A well-
thought-out business strategy should consider how a company can create space from competition
in its service offering, pricing model, delivery system and more.
3. Define your targets.
One of the most significant barriers to growth is poor targeting. Absent of very specific targets,
companies suffer from unclear messaging and thus misalignment between sales and marketing.
Defining niches and specialties allows companies to focus resources (of course, some companies
are generalists by design).
Clear target markets give a company the ability to create an integrated sales and marketing
approach, where marketing enables sales productivity. Sales and marketing plans are executed
more effectively when targets are tight.
4. Focus on systematic growth.
As one of our Vistage member clients says, “A thriving company is a growing company.” It is
only through growth that companies can afford to invest in things like technology, the best
people and new equipment. The strategic plan should identify in which segments a company will
grow and in what proportion, so that the product mix yields a specific net margin result.
Only after coming to such conclusions could a company know how much it can afford in terms
of capex, overhead expenses and so on.
5. Make fact-based decisions.
Strategy is a garbage in, garbage out exercise. Executives often complain about a lack of good
data, but we consistently find information that is useful in the formation of strategy.
We once worked with a Vistage member who was trying to quantify the value of various
segments served. By accessing the public records of a nearby port, we were able to quantify
actual shipments of merchandise by potential customers.
6. Think long term.
In the face of constant change, planning horizons are shorter than they used to be. However, only
thinking quarter to quarter is a trap that may rob companies of their ability to see around the
bend. Best-in-class companies create processes designed to treat strategy as an annual cycle
rather than a one-time, static event.
7. But, be nimble.
Companies can think long term and still be nimble. For example, a critical component of strategy
is an external forces analysis. Companies should be evaluating long-term external forces, and
adapting based on new information (meeting regularly-perhaps quarterly) to pivot.
Jeff Bezos of Amazon holds a strategy meeting every Tuesday to keep it front and center with
his management team.
8. Be inclusive.
To be nimble, companies are including different people in their strategy than in the past. At a
time when companies are hiring more millennial employees, there is greater transparency. While
I am never one to advocate that companies open their books (as that is a personal decision for the
entrepreneur), there is certainly movement toward more inclusion and transparency.
Deciding who to include in strategy formation is a critical selection. We recommend business
owners include people they can trust and that can think strategically.
9. Invest time in pre-work.
If you want your managers to take strategy seriously, make them conduct research and prepare
relevant information in advance of your strategy meetings.
10. Measure your results and execute excellently.
Every strategy should be actionable. Companies that are best-in-class:
 Have a strategic action plan that they track often (usually monthly).
 Promote common ownership of the plan across executives and departments.
 Utilize key performance indicators (KPIs) that are predictive and align directly with the
strategic plan.
 Have cascading goals that reach every department and resonate with employees so they
understand how their role contributes to the greater good.
 Set up their corporate calendar to promote productive meetings, and establish
a performance management cycle that supports cascading goals and objectives to every
employee.
 Rinse and repeat their strategy cycle every year.
The execution of strategic planning requires discipline, and it is the responsibility of senior
executives to promote processes that keep a team focused on the prize.

What is E-Business Meaning, Types, Components, Model and Features

Electronic Business (E-Business) is the administration of conducting any business using internet,
extranet, web and intranet. This would include buying and selling of goods or services using
commercial transactions conducted electronically along with providing customer or technical
support with the help of the internet. E-business is similar to E-commerce but it is more than just
a simple act of buying and selling services or goods online. In fact, it is the method of utilizing
digital information and advanced communication technologies to streamline different business
processes – from the initial to implementation phase. E-business includes a lot of business
processes including online order processing, CRM (Customer Relationship Management), supply
chain management and many more. E-commerce is a part of e-business, so let me give you a
comprehensive detail about what is e-business. 

Components of E-Business

E-business has several components including BI (Business Intelligence), CRM (Customer

Relationship Management), ERP (Enterprise Resource Planning), SCM (Supply Chain
Management), Collaboration, online activities, and electronic transactions within the firm. But
following three areas have great importance for e-business: 
1. E-Procurement
It is also known as supplier exchange in which business to business, business to government,
business to consumer, and sales of services are made with the help of the internet. Basically, e-
procurement is a way adopted by the companies to reduce the costs and efforts by sourcing
products or services electronically. 
2. Online Stores
It is an electronic sourcing (website or application) for products or services, such as online
shopping stores. Online stores are also known as e-shop, internet shop, web-store, virtual store,
web-shop, m-commerce, and online storefront. The main purpose of these online stores is to save
precious time and money.  
Anyone can buy products or services by making online payments using credit cards, cash on
delivery and other payment methods. The owners of online stores should host their eCommerce
website on the PCI compliant hosting because Payment Card Industry Security Standards
Council (PCI SSC) make it compulsory for those who are accepting the online payments.
3. Online Marketplace
It is an electronic commerce that connects the buyers and suppliers to the services or products
over the internet. Keep in mind, the operator of an online marketplace only presents the
inventory of other people and provides the transaction facility. 
Moreover, the following are also known as e-business areas:  
4. Online Communities
Online communities (also known as web communities or internet communities) are the groups of
people having the same interests or purposes who use the internet to communicate with each
other. It is used between the individuals and organizations to prepare transaction decisions.
5. Online Companies
It is electronic business cooperation that connects the individual companies and forms a virtual
business with a common transaction offer.  
Order Fulfillment Process
Order fulfillment process is based on all the activities needed for a customer to get his ordered
product or service including the related customer services. What is e-business and how the orders
are processed is discussed with the help of particular figures.

1. Product inquiry
You are surfing the website of any well-reputed business brand manufacturing laptops, desktops,
or monitors, and able to view their all products.
2. Sales Quote
Laptop prices, screen size or usage are clearly mentioned on the website for the sales quotation
for customers. 
3. Order Configuration
Once the customers select what he proposed to purchase, the number of products are easily
adjusted or canceled during this phase. 
4. Order Booking
This phase includes the booking of products available on the website, such as desktops, laptops,
or necessary accessories.
5. Order Confirmation
This process ensures the details of the order such as prices and quantities are accurate. 
6. Billing
Billing is the process that enables customers to pay for the products by Visa, cheque, ATM, or
other available payment methods.
7. Order Planning
Every customer has different options for delivery, so the order will be delivered accordingly. 
8. Order Processing 
Once the order is confirmed, the company ensures the right item in the right quantity, time,
place, price, and condition to the right customer. 
9. Shipment 
According to the customers’ requirements, the products will be delivered by means of an
express, Air-to-Sea initiative, and so on.
10. Delivery 
The products will be delivered within a given time slot at the right address.
11. Settlement 
It is the method to settle all the remaining charges, like delivery costs or extra products’ care
expenditure.
12. Returns 
Most of the companies offer the returns option with their particular terms and conditions. So, any
customer who has received the products with any technical or physical problems of products,
they can easily return their products within a specified period. 
E-Business Model
What is electronic business model and its components? In fact, it is a way that describes how a
company functions to provide the services or products and how it generates profits. Moreover, it
also defines how a company will create and adapt to new technologies or markets. All
components of a business model work together for successful business operations. 
1. E-business Concept
What is e-business concept and how is it essential for a successful business? It describes the
basic information of the business including goals, vision, products and offers from which it will
earn revenue. The effective concept is based on market analysis that will identify the customers’
interests to purchase the product and how much they can pay for it.  
What is e-business concept? It is based on goals such as “Become a major bus seller or
commercial enterprise” and objectives such as “have $80 million in revenues in five years”.
Whether the company is prepared to achieve their goals and objectives addressed in the
implementation plan for running a business and in the business plan process for startup
companies. 
Corporate strategies are also embedded in the e-business concept and describe how the business
concept will be implemented and can be modified in order to enhance business performance.
Business concept and market research are important to understand the market, who comprises it
and what do they want. Once the market research is done, now the pricing should be established
according to the competition. 
2. Value Proposition
As the name denotes, the value proposition is a value that an organization or business will
provide to its customers. It may include one or more of the following points: 
 Reduced price
 Improved service or better functionalities with user-friendliness
 Speedy delivery and improved assistance
 Products or services that result in greater efficiency and productivity
 Access to available inventory having different options for the buyer
 Value Delivery With The Help Of Integrations 
Every functional website is based on two parts: frontend for dealing directly with the customers
and backend in order to automate the online operations of the company without having direct
dealing with customers. Order placements using POS (Point of Sales) systems, product
customization, tracking and order fulfillment are the activities that require integrated systems. 
3. Sources of Revenue
What does eCommerce mean and how do companies earn revenue? Ecommerce is also known as
Electronic/internet commerce, refers to the buying and selling of services/products. It also
includes the online payment options to the great online shopping experience. So, e-business will
have three, four, or a mix of the following sources referred to as a revenue model:
 Advertisement
 Affiliation
 Agent/Representative commissions
 Licensing
 Sales commissions
 Sponsorship
 Syndication
 Use Fees
 Subscription
4. Required Activities, Resources, and Capabilities
In order to carry out the mission of the business, different activities are required and certain
resources are needed. For example, professional employees with specific skills or capabilities
can better perform particular business activities. 
Activities
Particular business processes or groups of processes that are required to implement the business
concept are known as activities. The operational business model is used to identify the
costs/expenses and outputs of each activity. 
What is e-business and its processes? Keep in mind, some of the e-business activities may
infringe on patents. Different business processes or “Method of doing business” might be
patented, so that the business model may unintentionally include the intellectual property and
patents will be freely awarded for business processes. For example: 
Amazon’s “one-click” purchasing patent has a most widely renowned patent infringement case
because buyers can easily buy the products and services without using a shopping cart. Several
companies have patented Internet Business Models, which are being used by many companies.
So, they charge for licensing otherwise they will face problems in the future development of e-
business. 
Resources
Organizations require human, tangible, intangible, and supporting resources in order to perform
the activities in an efficient manner. Tangible resources are also known as physical and financial
including company equipment, case reserves, and facilities. 
Whereas the intangible resources include the customized software, customers data, intellectual
property and business processes that can be patented. Supporting resources include the IT and
communication processes and organizational structure.  
Capabilities
Workers with required skills are vital for every successful business. What is e-business and Why
are the capabilities necessary?  E-business is similar to the traditional business except internet
presence, broader audience and buying facility without visiting the company’s outlet. First/initial
wages are the highest cost for a business and capable worker may not be available all the time.   

Generally, e-business application development is based on four critical factors: where the assets
reside (databases), how they are processed (applications), who manages the processes or
applications (IT/Operating Staff) and who is the beneficiary (end-user)?  

What is E-Commerce and its Types?

It is the short form of “Electronic Commerce” that is used for buying and selling products or
services over the internet. E-commerce has the following types: 
 Business to Business (B2B)
As the name represents, it is the name of electronic transactions of different services or products
between two companies or businesses. Payment processing companies and customer relationship
management (CRM) platforms are included in the B2B model. 
2. Business to Consumer (B2C)

B2C is the most common form of e-commerce business because it is the relationship between a
seller and final customers. Business to Consumer has developed greatly with the development of
the internet and the latest technologies. Anyone can find various kinds of online stores on the
internet and buy products or services without visiting the market. 
3. Consumer to Consumer (C2C)

In C2C, electronic transactions are made between the customer and another customer. It became
possible with the help of third-parties such as eBay as a marketplace for online action. 
4. Consumer to Business (C2B)

Any particular company cannot provide anything and they also need different products/services
to execute their business processes. So, it is a kind of business model in which the customers or
users create a service/product that is used by the company. For example, any freelance designer
is creating a logo and any business can use his services as they need.  
5. Business to Administration (B2A)

B2A is a form of electronic transactions of the products or services in which the business and
government are involved. For example, social security, legal documents, etc. 
6. Consumer to Administration (C2A)

Consumer to Administration includes all transactions between the consumer/customer and the
government. For example, taxes, education, etc.