Question

What is one reason two countries may sign a treaty to create a direct agreement with one another?

O to establish barriers to trade
O to cut taxes
O to collect more taxes to limit trade
O opportunities for competing companies​

Answer 1

One reason two countries may sign a treaty to create a direct agreement with one another is to establish opportunities for competing companies. By signing a treaty, countries can create a framework that promotes fair competition and cooperation between their respective companies. This can include provisions for joint ventures, technology transfer, investment protection, and intellectual property rights. Such agreements aim to foster economic growth, enhance trade relations, and create a level playing field for businesses from both countries.

Answer 2

Countries may sign treaties to establish trade barriers to protect domestic industries, often balancing between protective national laws and international agreements that aim to reduce protectionism, like those under the WTO. Therefore, the correct option is A.

Step-by-step explanation:

One reason two countries may sign a treaty to create a direct agreement with one another is to limit opportunities for competing companies by establishing trade barriers. Nations may do this to protect domestic industries from foreign competition. For instance, a government might impose tariffs on imported goods like sugar or textiles to shield local producers. However, this could be at odds with broader international efforts, such as those under the World Trade Organization (WTO), aimed at reducing protective barriers and fostering free trade.

When countries sign treaties like the United States-Canada-Mexico Agreement (USCMA), which replaced NAFTA, they are typically working towards lowering trade restrictions and encouraging cross-border commerce. Nonetheless, domestic political pressures may lead to the creation of specific protectionist measures, which can be somewhat curtailed by international trade agreements that a nation is party to, therefore giving politicians a tool to push back against special interest groups demanding protectionist policies.