Labour standards include provisions on minimum wages and working conditions, while environmental standards would prevent trade if there were fears of environmental damage. As a result, many countries have moved away from the multilateral process instead of bilateral or regional trade agreements. One such agreement is the North American Free Trade Agreement (NAFTA), which entered into force in January 1994. Under NAFTA, the United States, Canada and Mexico agreed to phase out all tariffs on trade in goods and remove restrictions on trade in services and foreign investment over a decade. The United States also has bilateral agreements with Israel, Jordan, Singapore, and Australia, and is negotiating bilateral or regional trade agreements with countries in Latin America, Asia, and the Pacific. The European Union has also concluded free trade agreements with other countries around the world. The EU has concluded trade agreements with these countries/regions, but both sides are currently negotiating an update. The role of the IMF was fundamentally altered by variable exchange rates after 1971. At this point, the organization began examining the economic policies of its borrowers to determine whether a lack of capital was due to economic fluctuations or economic policies. The IMF also examined what types of government policies would ensure economic recovery. The current challenge is to help countries implement economic policies that reduce the frequency of crises in emerging markets, particularly in middle-income countries, which are vulnerable to massive capital outflows.
To meet this challenge, the IMF`s activities have expanded beyond exchange rate surveillance to monitor the macroeconomic performance of its member countries. Today, it plays an active role in the development and management of economic policy around the world. The world has received almost more free trade from the next round, known as the Doha Round trade deal. If successful, Doha would have reduced tariffs for all WTO members in terms of area. One of the motivations for these standards is the fear that unfettered trade could lead to a “race to the bottom” of labour and environmental standards, as multinationals seek low wages and lax environmental regulations to cut costs. Nevertheless, there is no empirical evidence of such a breed. In fact, trade usually involves the transfer of technology to developing countries, which can raise wage rates, as the Korean economy – among many others – has shown since the 1960s. In addition, increased revenues are allowing cleaner production technologies to become affordable. Replacing India-made scooters that belch in India with scooters imported from Japan, for example, would improve air quality in India. Regional trade agreements are mutual trade agreements between two or more partners (nations).