Companies in the Member States have a greater incentive to trade in new markets, thanks to attractive trading conditions, because of the policy contained in the agreements. Member States benefit from trade agreements, including by creating more employment opportunities, reducing unemployment rates and experimenting with the market. Since trade agreements are usually accompanied by investment guarantees, investors wishing to invest in developing countries are protected from political risks. Regional trade agreements vary according to the level of commitment and agreement between Member States. The fourth round, launched in October 2007, was to be concluded by the Third Council of Ministers in October 2009. This round aims to extend preference coverage to at least 50% of each member`s number of customs lines and at least 20-25% of the value of bilateral trade. In addition, a customs concession of at least 50% (on average) should be granted. Under a bilateral trade agreement, the countries concerned grant each other access to their markets, resulting in trade and economic growth. The agreement also creates an environment that promotes fairness, as a number of rules are followed in business.
The five areas covered by bilateral agreements are as follows: when applying a protective measure, the Member must maintain a substantially equivalent level of concessions and other obligations to the exporting countries concerned. This proposal may be the subject of an appropriate trade equalisation agreement with the members concerned. In the absence of such an agreement, the exporting members concerned may, for the most part, suspend equivalent concessions and other obligations. The latter right may not be exercised during the first three years of the application of a safeguard measure if the measure is taken on the basis of an absolute increase in imports and is otherwise in conformity with the provisions of the Agreement. A free trade agreement removes all barriers to trade between members, which means they can move freely between goods and services. As far as relations with non-members are concerned, the trade policy of each member is always effective. Trade relations between Sri Lanka and India marked a historic milestone with the signing of the India-Sri Lanka Free Trade Agreement (ISFTA) on 28 December 1998 as the 01st bilateral free trade agreement between Sri Lanka. ISFTA entered into force on 1 March 2000.
ISFTA is now in full implementation, as both sides have completed their commitments under the Customs Liberalization Programme (TLP), as explained below. A common market is a kind of trade agreement in which members remove internal barriers to trade, adopt common strategies for relations with non-members, and allow members to move resources freely among themselves. . . .