The derogation from the customs union was intended in part to take account of the creation of the European Economic Community (EC) in 1958. The EC, originally made up of six European countries, is now known as the European Union (EU) and has 27 European countries. The EU has gone beyond simply removing barriers to trade between Member States and creating a customs union. It has moved towards greater economic integration by becoming a common market – a regulation that removes barriers to mobility from factors of production such as capital and labour between participating countries. As a common market, the EU also coordinates and harmonizes each country`s tax, industrial and agricultural policies. In addition, many EU Member States have created a single currency area by replacing their national currencies with the euro. In principle, free trade at the international level is no different from trade between neighbours, cities or states. However, it allows companies in each country to focus on the production and sale of goods that make the best use of their resources, while others import goods that are scarce or unavailable domesticly. This mix of local production and foreign trade allows economies to grow faster and, at the same time, better meet the needs of their consumers.
Despite the potential tensions between the two approaches, it appears that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy. However, both the WTO and agreements such as NAFTA are controversial among groups such as alter-globalists, who argue that such agreements serve the interests of multinationals and not workers, while free trade was a proven method of improving economic performance and increasing overall income. To counter this opposition, pressure has been exerted for labour and environmental standards to be included in these trade agreements. Labour standards contain provisions relating to the minimum wage and working conditions, while environmental standards would prevent trade if there were fears of environmental damage. USTR is primarily responsible for the management of U.S. trade agreements. These include monitoring the implementation of trade agreements with the United States by our trading partners, the application of U.S. rights under those agreements, and the negotiation and signing of trade agreements that advance the President`s trade policy.
Trade agreements are generally unilateral, bilateral or multilateral. Even in the absence of the constraints imposed by the most favoured nation and national treatment clauses, it is sometimes easier to obtain general multilateral agreements than separate bilateral agreements.