What Is Market Access?
Market access refers to the ability of a company or country to sell goods and services across borders. Market access can be used to refer to domestic trade as well as international trade, although the latter is the most common context. Market access is not the same as free trade.
The ability to sell in a market is often accompanied by tariffsduties, or even quotaswhereas free trade implies that goods and services flow across borders without any extra costs imposed by governments. Even so, market access is seen as an early step toward deepening trade ties. Market access is increasingly the stated goal of trade negotiations as opposed to true free trade.
Key Takeaways:
- Market access refers to the ability of a company or country to sell goods and services across borders.
- Tariffs, duties, and quotas may all be a component of market access, which should not be confused with the term “free trade.”
- Market access is often negotiated between countries for their mutual benefit, but it may not necessarily result in freer trade.
Understanding Market Access
International trade involves complex negotiations between two or more governments. Throughout these negotiations, participants typically push for market access that favors their particular export industries while also attempting to limit market access to import products that could potentially compete with sensitive or politically strategic domestic industries.
Market access is considered distinct from free trade because the process of negotiation is aimed at beneficial trade that may not necessarily be freer trade.
Market Access as the New Trade Reality
The give and take surrounding market access negotiations characterizes international trade today and explains why most negotiations seek broader market access rather than freer trade. After decades of increasing global trade, there is evidence that large swaths of people no longer support universally free trade due to concerns over domestic job security.
The United States, a long-time proponent of freer global trade, has seen an increase in public distrust of free trade in conjunction with the rapid growth of its trading partners’ economies, particularly Mexico and China. However, a majority still want the benefits of international trade, such as a wide variety of competitively priced goods and a strong export market for domestically produced products.
Market Access and the Role of the World Trade Organization (WTO)
The World Trade Organization (WTO) is an international institution created in 1995 that oversees the trade rules among nations for the global good. The WTO affects market access by providing a platform on which member governments can negotiate and resolve trade issues with other members. For example, the WTO has lowered trade barriers to improve market access among member countries and has also maintained trade barriers when it made sense to do so in the global context.
Special Considerations
Despite negative public sentiment toward international trade, it has consistently been the main driver of overall global wealth, although the wealth is not equally distributed. To avoid negative connotations, trade deals are now discussed in terms of market access rather than free trade.
This is wordplay to some extent because many of the same aims are being met, and trade ties typically deepen over time because of the net gain for the economies involved. Interestingly, the term international commerce is often favored over the term international trade.