Free Trade 

I. Definitions and principales

II. Adventages and Drawbacks

III. Free trade around the world

IV. Morocco free trade

 Part 1 : what is free trade ?
1. Definitions :
 A policy followed by some international markets in which countries governments do
not restrict imports from, or exports to, other countries.
 Treaty between countries allowing commerces in goods and services without tariffs
(duties) or quotas applied to import and export.
2. Free trade and protectionism :

Free trade Protectionism

Governments put in place policies that allow Governments put in place policies to stop
foreign producers to freely sell their goods in foreign producers to freely selling goods in
the country (promote trade) the country (restrict trade)
3. Levels of integration :
a. Preferential trade agreement :
 Trade agreement between countries in which they lower (and not eliminate) tariffs for
each other but not for the rest of the world.

5- Economic & Monotory Union

4- Commun Market

3- Customs Union

+ Free movment of Labor and + harmonized monetary

2- Free Trade Area + Commun Capital policies, taxation, and
0 Tariff rate external government spending
+ Cooperation in monetary,
tariffs
fiscal, and employment policies + Common currency

b. Effects of Free Trade :

Trade creation :

 High-cost domestic production is replaced by low-cost imports from other members.

Trade diversion :

 Low-cost imports from non members are diverted to high-cost imports from member nations
 Part 2 : what is free trade ?

Adventages Drawbacks
- Increases economic efficiency - Non-cooperation of Countries
- Higher levels of investment capital - Degradation of natural ressources
- Lowers world prices - Poor working conditions
- Realization of economies of scale - Theft of intellectual property
- Higher employment rates - Lack of protection in Infant industies
- Technology transfer - Harmful Products
Part 3 : Free trade around the world

1. European Integration :
o 1957, Treaty of Rome: European Economic Community.
o 1992, Maastrich Treaty: European Union.
o 1999, Monetary Union: Euro Zone; 11 countries.

Organisation of the EU :

 The executive body of the EU is the European Commission, headquartered in Brussels.

 The Council of Ministers has the final power to decide EU actions.
 The future expansion of the EU will cause changes in the decision marking prrocesses.
2. North American Economic Integration :
 Although the EU is undoubtedly the most sucessful and well-known integrative effort,
integration efforts in North America has gained momentum and attention.
 North America integration has an interest in purely economic issues and there are no
constituencies for political integration.
 In January 1994 a FTA (Free Trade Area) between Canada, Mexico and US took place
(NAFTA)
 Addressed the following :
- Trade in goods;
- Services, Financial, Telecommunications;
- Foreign direct investment;
- Intellectual property rights;
- Dispute settlement.
3. Integration in Latin America :
 Before the signing of the US, Canada Free Trade Agreement, all of the major trading bloc
activity in the Americas had taken place in Latin America.
 One of the longest lived integration efforts among developing countries was the Latin
America Free Trade Association (LAFTA), formed in 1961.
4. Mercosur : South American commun market
 1991 Treaty of Asuncion : Argentina, Brazil, Paraguay and Uruguay.
 Chile Bolivia associate members in 1996 and 1997, respectively.
 Mercosur entered into force in 1995.
 Full membership for Venzuela on 31 July 2012.
 Part 3 : M orocco free trade

1. Morocco-European Union Assosiation Agreements :

 The Association Agreement between Morocco and the European Union signed on February
26, 1996 and came into force on March 1st, 2000.
 Progressive reducing tariff for industrial products Agricultural products scince 2004.
2. Morocco-United States Free Trade Agreement :
 Morocco and the United States signed an FTA on June 15, 2004. And it entered into force
on July 1st 2005.
 Goods : Industrial, Agricultural and Commercial.
 Services : Finatial and Communications.
 Protection of Intelectual property and environment.
3. Morocco-Turkey Free Trade Agreement :
 Morocco and Turkey signed a FTA in Ankara, April 7, 2004.
 Entred in force in Janary 1st, 2006.
 Industrial product : remove all tariff and non tariff barriers.
 Agricultural : promote free movement and reduce progressively tariff rate.
4. Arab Free Trade Zone :
 The application of the Convention for the facilitation and development of Inter-Arab trade
exchanges came into force on January 1st, 1998
 Aims to gradually establish a free trade zone among member countries of the arab league
(except Algeria, Djibouti, Comoros and Mauritania).
 Entred in force January 1st, 2005.
 16 countriers.
5. Morocco-Arab Countries Free Trade Agreement :
 Morocco signed on February 25, 2004 a quadrilateral FTA with Egypt, Tunisia and Jordan
under the Agadir Declaration, signed May 8, 2001.
 Entred in force in March 27, 2007.