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Chicago Fed Letter, No. 74, October 1993
International Ties
Today, a good or service produced in a remote part of the world can compete with a local good or service more easily than twenty years ago. To some extent, this change is due to advances in technology (such as telecommunications) and to widespread economic development. But it is also due to trade liberalization, much of which can be attributed to the General Agreement on Trade and Tariffs (GATT), the world's joint mechanism for regulating international trade and trade negotiations. Since GATT's inception after World War II, more than 110 countries have joined. In addition, regional trading blocs have united countries in several regions of the world. These blocs reduce or eliminate tariffs among members, which in turn makes members' goods less costly and more competitive in the world market. The European Economic Community, the Central American Common Market, and the U.S. - Canada Free Trade Agreement are just a few examples of regional trading blocs in existence today. The proposed North American Free Trade Agreement between the U.S., Canada and Mexico is another.
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