Global trade allows rich countries to use their resources – such as labour, technology or capital – more efficiently. Different countries have different assets and natural resources: land, labour, capital and technology, etc. This allows some countries to produce the same much more efficiently, i.e. faster and at a lower cost. Therefore, they can sell it cheaper than other countries. If a country cannot produce an item efficiently, it can obtain it by trading with another country that can. This is called specialization in international trade. However, these advantages must be weighed against one drawback: by excluding certain countries, these agreements can shift the composition of trade from low-wage countries that are not parties to the agreement to high-cost countries. A trade agreement (also known as a trade pact) is a far-reaching fiscal, tariff and trade agreement that often includes investment guarantees. It exists when two or more countries agree on conditions that help them trade with each other.
The most common trade agreements are preferential and free trade agreements concluded to reduce (or eliminate) customs duties, quotas and other trade restrictions on items traded between signatories. For many countries, unilateral reforms are the only effective way to reduce barriers to internal trade. However, multilateral and bilateral approaches – the removal of trade barriers in coordination with other countries – have two advantages over unilateral approaches. First, the economic benefits of international trade are amplified and amplified when many countries or regions agree to mutually dismantle barriers to trade. By expanding markets, concerted trade liberalization increases competition and specialization among countries, thus giving a greater boost to consumer efficiency and incomes. Regional trade agreements are very difficult to establish and engage in when countries are more diverse. Trade agreements designated as preferential by the WTO are also called regional agreements (RTAs), although they have not necessarily been concluded by countries in a given region. There are currently 205 agreements in force (as of July 2007). More than 300 have been notified to the WTO.  The number of free trade agreements has increased significantly over the past decade.
Between 1948 and 1994, the General Agreement on Tariffs and Trade (GATT), the WTO`s predecessor, received 124 notifications. More than 300 trade agreements have been concluded since 1995.  The World Bank is an international financial institution that lends to developing countries for investment programs. The Official Goal of the World Bank is to reduce poverty. According to the Articles of Agreement of the World Bank (as they entered into force on 16 February 1989), all its decisions must be guided by the obligation to promote foreign investment and international trade and to facilitate capital investment. The exemption from the customs union was intended to take account of the creation of the European Economic Community (EC) in 1958. The European Commission, which originally consisted of six European countries, is now known as the European Union (EU) and comprises twenty-seven European countries. The EU has gone beyond simply removing barriers to trade between Member States and forming a customs union. It has moved towards even greater economic integration by becoming a common market – a regime that removes obstacles to the mobility of factors of production such as capital and labour between participating countries.
As a common market, the EU also coordinates and harmonises the fiscal, industrial and agricultural policies of different countries. In addition, many EU members have formed a single currency area by replacing their national currency with the euro. The EU functions through a system of independent supranational institutions and intergovernmental decisions negotiated by the Member States. The important institutions of the EU are the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union and the European Central Bank. The European Parliament is elected every five years by EU citizens. The EU has developed a single market through a single system of laws in force in all Member States. Within the Schengen area (which includes EU and third countries), passport controls have been abolished. EU policy aims to ensure the free movement of people, goods, services and capital, to legislate in the areas of justice and home affairs and to maintain common policies in the areas of trade, agriculture, fisheries and regional development. A monetary union, the euro area, was created in 1999 and has consisted of 17 Member States since January 2012. Thanks to the Common Foreign and Security Policy, the EU has developed a limited role in external relations and defence. Permanent diplomatic missions have been established throughout the world. The EU is represented at the United Nations, the WTO, the G8 and the G20.
Trade unions and environmentalists in rich countries have been the most active in the search for labour and environmental standards. The danger is that the application of such standards could simply become an excuse for protectionism in rich countries, which would harm workers in poor countries. In fact, the inhabitants of poor countries, whether capitalists or workers, have been extremely hostile to the imposition of such norms. .