Existing unilateral export preferences were streamlined in 1968 at the United Nations Conference on Trade and Development (UNCTAD) with the introduction of the Generalized Preference System (GSP) and GATT articles were amended to allow discrimination. Since then, several other programs have multiplied. For example, in 1975, the EU granted the former colonies of Africa, the Caribbean and the Pacific (ACP) unilateral preferences (the Lomé Conventions) which were rationalized in 2000 under the Cotonou Agreement. The United States has adopted acts such as the Caribbean Basin Initiative (CBI) against certain commodity groups and countries. In addition, the GSP has increased over the past decade with the EU`s “GSP-plus” and “Everything but Arms” (EBA) initiative to least developed countries (LDCs) or the African Growth Opportunity Act (AGOA) granted by the United States to African countries. What is a unilateral trade agreement? It is a treaty that benefits only one state, is imposed on one nation by another, and has the potential to support the economies of developing countries. Emerging countries fear trade agreements with developed countries. They fear that the imbalance of power will bring unilateral benefits to the developed nation. First, tariffs increase import costs and make local products more competitive, which stimulates the economy and creates jobs. But if customs prices are generally high, if local exports fall, and just after the fall in world trade, it hurts everyone. This sequence of events occurred during the Great Depression in the 1930s, and subsequently world trade fell by 65 per cent.
A trade agreement (also known as a trade pact) is a large-scale tax, customs and trade agreement, which often includes investment guarantees. It exists when two or more countries agree on conditions that help them trade with each other. The most frequent trade agreements are preferential and free trade regimes to reduce (or remove) tariffs, quotas and other trade restrictions imposed on intermediaries. After World War II, the United States began negotiating lower tariffs with 15 countries. These included Australia, Belgium, Brazil, Canada, China, Cuba, Czechoslovakia, France, India, Luxembourg, the Netherlands, New Zealand, South Africa and the United Kingdom. Trade pacts are often politically controversial because they can change economic practices and deepen interdependence with trading partners. Improving efficiency through “free trade” is a common goal. Most governments support other trade agreements. Although the WTO embodies the principle of non-discrimination in international trade, Article 24 of the GATT authorizes the creation of free trade zones and “customs unions” among WTO members. A free trade area is a group of countries that remove all tariffs on trade with each other, but retain their autonomy in setting their tariffs with non-members.
A customs union is a group of countries that remove all tariffs on trade between them, while maintaining a common external tariff for trade with countries outside the EU (which is technically contrary to the MFN). Trade agreements designated by the WTO as preferential agreements are also referred to as regional agreements (RTAs), although they are not necessarily concluded by countries within a given region. Currently, 205 agreements are in effect as of July 2007. More than 300 people 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), predecessor to the WTO, received 124 notifications. Since 1995, more than 300 trade agreements have been concluded.  A trade agreement signed between more than two parties (usually neighbouring or in the same region) is considered multilateral. They face the main obstacles – the n