These agreements between three or more countries are the most difficult to negotiate. The larger the number of participants, the more difficult the negotiations. They are, by nature, more complex than bilateral agreements, insofar as each country has its own needs and requirements. “The economic benefits of the agreement may be marginal for Southeast Asia, but there are some interesting trade and customs dynamics for Southeast Asia,” said Nick Marro of the Economist Intelligence Unit (EIU). The RCEP began negotiations in 2012 as an ASEAN initiative with countries with which it had already concluded free trade agreements (FTAs): Australia, China, South Korea, Japan, India and New Zealand. However, India decided last year to dissociate itself from the agreement for fear of being overwhelmed by cheaper products, especially from China. Japanese Prime Minister Yoshihide Suga on Saturday reaffirmed his government`s support for “the expansion of a free and fair economic zone, including the possibility of India`s future return to the agreement, and hopes to win the support of other countries.” Once negotiated, multilateral agreements are very powerful. They cover a wider geographic area, giving signatories a greater competitive advantage. All countries also give themselves the status of the most favoured nation – and grant the best conditions of mutual trade and the lowest tariffs. The new free trade bloc will be larger than the agreement between the United States, Mexico and Canada and the European Union. The RCEP will increase China`s trade opportunities in the Asia-Pacific region to the detriment of the United States and is the first multilateral free trade agreement to which Beijing has joined and which will be able to increase its exports by reducing tariffs. The organization, founded in December 1994, aims to develop natural and human resources for the good of the people of the region. According to the United Nations, it focuses on creating a large, unified economic organization to overcome trade barriers.
The United States has another multilateral regional trade agreement: the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). This agreement with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua eliminated tariffs on more than 80% of U.S. exports of non-textile goods. These occur when one country imposes trade restrictions and no other country responds. A country can also unilaterally relax trade restrictions, but this rarely happens. This would penalize the country with a competitive disadvantage. The United States and other developed countries do so only as a kind of foreign aid to help emerging countries strengthen strategic industries that are too small to be a threat. It helps the economies of emerging countries to develop and creates new markets for U.S. exporters. Free trade between the three member countries of Canada, the United States and Mexico has been in place since January 1994. Although tariffs were not fully eliminated until 2008, trilateral trade exceeded $1.12 trillion in 2014.
The EU is a single market that resembles a free trade area, since it has no tariffs, quotas or trade taxes; but an internal market allows the free movement of goods, services, capital and people.