What is the primary role of a trade agreement?

The primary role of a trade agreement is to facilitate trade by reducing tariffs and regulatory barriers. Trade agreements are designed to create a more favorable trading environment by lowering the costs associated with transactions between participating countries. This reduction in tariffs means that imported goods are less expensive, thereby encouraging trade flows between nations.

Moreover, these agreements often address regulatory barriers that can complicate international trade, such as differing standards or requirements for products. By creating a more streamlined process for exchanging goods and services, trade agreements aim to boost economic cooperation and increase market access for businesses in the member countries.

In this context, focusing solely on increasing tariffs or restricting trade does not align with the fundamental objective of trade agreements, which is to promote trade liberalization. While domestic competition is important, the enhancement of competition among businesses is generally a byproduct of increased trade rather than a primary goal of the agreements themselves.