Which term describes a formal contract between countries to reduce barriers like tariffs?

Which term describes a formal contract between countries to reduce barriers like tariffs?

• A. UN (United Nations)
• B. Trade Route
• C. Trade Agreement
• D. Transportation Network

Answer: (C)

A trade agreement is a formal pact between countries that sets the terms for their commerce and often lowers or eliminates tariffs and other trade barriers. It creates predictable rules for what can be traded, how it’s taxed, and how disputes are resolved, making cross-border business smoother and more stable. Because it’s a legal instrument signed by participating nations, it carries binding commitments beyond simple statements or infrastructure. The other options aren’t about binding terms to reduce trade barriers. A United Nations is an international organization that facilitates cooperation, not a specific contract to lower tariffs. A trade route is just a path goods travel. A transportation network is the infrastructure that enables movement, not a treaty or agreement governing trade.

A trade agreement is a formal pact between countries that sets the terms for their commerce and often lowers or eliminates tariffs and other trade barriers. It creates predictable rules for what can be traded, how it’s taxed, and how disputes are resolved, making cross-border business smoother and more stable. Because it’s a legal instrument signed by participating nations, it carries binding commitments beyond simple statements or infrastructure.

The other options aren’t about binding terms to reduce trade barriers. A United Nations is an international organization that facilitates cooperation, not a specific contract to lower tariffs. A trade route is just a path goods travel. A transportation network is the infrastructure that enables movement, not a treaty or agreement governing trade.