The creation of free trade zones is seen as an exception to the most privileged principle of the World Trade Organization (WTO), since the preferences of the parties to the exclusive granting of a free trade area go beyond their accession obligations. [9] Although GATT Article XXIV authorizes WTO members to establish free trade zones or to conclude interim agreements necessary for their establishment, there are several conditions relating to free trade zones or interim agreements leading to the creation of free trade zones. The U.S.-Jordan Free Trade Agreement came into force on December 17, 2001. The agreement removes tariffs on U.S. and Jordanian products over a 10-year period; However, most products will be duty-free well before 2011. The failure of Doha has enabled China to reach a global level of trade. It has signed bilateral trade agreements with dozens of countries in Africa, Asia and Latin America. Chinese companies have the right to develop the country`s oil and other raw materials. In exchange, China offers loans and technical or commercial assistance. In addition, free trade is now an integral part of the financial and investment systems. U.S. investors now have access to most foreign financial markets and a wider range of securities, currencies and other financial products. Both the creation of trade and the diversion of trade have a decisive impact on the establishment of a free trade agreement.

The creation of trade will result in a shift in consumption from a cost producer to a low-cost producer, which will lead to an expansion of trade. On the other hand, trade diversion will mean that trade will move from a low-cost producer outside the zone to a more expensive producer in the free trade agreement. [16] Such offshoring will not benefit consumers under the free trade agreement, which will be deprived of the opportunity to purchase cheaper imported goods. However, economists note that trade diversion does not always harm the overall national well-being: it can even improve national well-being as a whole if the volume of misappropriated trade is low. [17] The Doha Round would have been the world`s largest trade agreement if the United States and the EU had agreed to reduce their agricultural subsidies. As a result of its failure, China has gained ground on the world`s economic front through cost-effective bilateral agreements with countries in Asia, Africa and Latin America. It is also important to note that a free trade agreement is a reciprocal agreement that is authorized by Article XXIV of the GATT. Autonomous trade agreements for developing and least developed countries are permitted by the 1979 decision by the signatories of the General Agreement on Tariffs and Trade (GATT) («empowerment clause») on differentiated and more favourable treatment, reciprocity and increased participation of developing countries. It forms the legal basis for the WTO`s Generalized Preference System (GSP).

[13] Free trade agreements and preferential trade agreements (as mentioned by the WTO) are considered an exception to the MFN principle. [14] The United States currently has 14 free trade agreements with 20 countries. Free trade agreements can help your business enter and compete more easily in the global marketplace through zero or reduced tariffs and other provisions. Although the specifics of each free trade agreement are different, they generally provide for the removal of trade barriers and the creation of a more stable and transparent trade and investment environment. This makes it easier and cheaper for U.S. companies to export their products and services to the markets of their trading partners. The benefits of free trade were outlined in On the Principles of Political Economy and Taxation, published in 1817 by economist David Ricardo. On the other hand, some local industries benefit.

They are finding new markets for their duty-free products. These industries are growing and employing more labour. These comp