Question

Why do countries enter into trade agreements? Check all that apply.

Countries enter agreements for the purpose of raising taxes.
Agreements help countries to import goods they cannot produce as easily.
Agreements help countries to create new trade barriers.
Trade agreements help to lower tariffs and taxes.
Countries enter agreements to be able to sell their products more easily.

Answer 1

Correct choices: 2, 4, and 5.

Brief reasons:
- 2 (True): Agreements lower barriers and simplify rules, making it easier to import goods a country cannot produce efficiently or at all.
- 4 (True): A main purpose of trade agreements is to reduce tariffs and other trade-related taxes and costs.
- 5 (True): Agreements open foreign markets and reduce export impediments, so countries can sell goods more easily.

Not correct:
- 1 (False): Trade agreements are generally intended to reduce trade taxes (tariffs), not raise them.
- 3 (False): Agreements aim to remove or reduce trade barriers rather than create new ones.