TRADING BLOCKS

TRADING BLOCKSTRADING BLOCKS

George V JamesGeorge V James

ContentsContents

MeaningTypes of Trading BlocksMajor Trading BlocksVarious Blocks in brief

MeaningMeaning

Group of countriesExistence within a geographical region.Motive is to protect themselves from the

imports of non-membersA form of economic integration

increasingly shaping the pattern of world trade.

TYPES OF TRADING BLOCSTYPES OF TRADING BLOCS

Major Types of Trading Blocs:-

1.Preferential Trade Area (PTA’s)

2.Free Trade Area

3.Customs Union

4.Common Market

MAJOR TRADE BLOCSMAJOR TRADE BLOCS

A. EU (European Union)

B. NAFTA (North American Free Trade Agreement)

C. OPEC (Organisation of Petroleum Exporting Countries)

D. ASEAN (Association of South East Asian Nations)

E. SAARC ( South Asian Association for Regional Cooperation)

F. MERCOSUR (Mercado Comun del Cono Sur, also known as Southern Common Markets (SCCM)

A. European Union (EU)A. European Union (EU)

The world’s largest trading bloc. The 2nd largest economy in the world. Originally called the “Economic Community”.

(Common Market or The Six) Formed from the ‘Treaty of Rome’ in 1957. It comprised of 6 members- Germany, France, Italy,

Belgium, Netherlands and Luxemburg. At present it comprises of 27

member states.

Objectives of European UnionObjectives of European Union

Setting up a common market for all goods & services by eliminating all trade barriers.

Promoting free trade among the members.

Continuous and balanced expansion.Closer relations between the member

states.

B. North American Free Trade Agreement (NAFTA)B. North American Free Trade Agreement (NAFTA)

Initially bilateral trade between Canada & U.S. NAFTA went into effect in January 1,1994 after the joining

of Mexico, creating a trilateral trade bloc in North America. World’s largest free trade area. NAFTA has two supplements: the North American

Agreement on Environmental

Cooperation (NAAEC) and the North

American Agreement on Labour

Cooperation (NAALC).

Provisions of NAFTAProvisions of NAFTA

Eliminate barriers to trade & investment between US, Canada & Mexico.

Duty-free market access.Trade rules- safeguard, subsidies

countervailing & antidumping duties, health & safety standards.

Rules on trade in services & investment.Protection of intellectual property.Dispute settlement mechanism.

C. Organisation of Petroleum Exporting Countries (OPEC)C. Organisation of Petroleum Exporting Countries (OPEC)

A permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960 ( Iraq, Kuwait, Iran, Saudi Arabia and Venezuela ).

Later joined by 8 more countries. The main objective is to coordinate and unify petroleum

policies among the member countries. To secure fair and stable price for petroleum producers. Proper price and regular supply for petroleum consuming

nations. Its Headquarter is in Vienna, Austria.

D. Association of Southeast Asian Nations (ASEAN) D. Association of Southeast Asian Nations (ASEAN)

Formed 8th August,1967 (Indonesia, Malaysia, Philippians, Singapore & Thailand)

Later joined by Brunei, Burma, Cambodia, Laos & Vietnam

Established ASEAN Free Trade Area (AFTA)Headquarter- Jakarta, Indonesia.

Aims of AFTA:-Aims of AFTA:-

Primary goals of AFTA are:-To encourage inflow of foreign investment

into this region.To establish free trade area in the member

countries.To reduce tariff of the products produced in

ASEAN countries.

Objectives of ASEANObjectives of ASEAN

Accelerating Economic Growth.Social Progress.Cultural Development among its

members.Protection of regional peace and

stability.Discuss issues peacefully.

E. South Asian Association for Regional Cooperation (SAARC)E. South Asian Association for Regional Cooperation (SAARC)

Established on 8th December 1985 Member Countries- Bangladesh, Bhutan, India,

Maldives, Nepal, Pakistan & Sri Lanka Headquarter- Kathmandu, Nepal

Objectives of SAARCObjectives of SAARC

to promote the welfare of the people of South Asia and to improve their quality of life

to accelerate economic growth, social progress and cultural development in the region

to promote and strengthen selective self-reliance among the countries of South Asia

to contribute to mutual trust, understanding and appreciation of one another's problems

to strengthen cooperation with other developing countries

to maintain peace in the region

The SAARC SecretariatThe SAARC Secretariat

SAPTASAPTA

• The council of ministers have signed the SAARC preferential trading arrangement agreement on April 11, 1993.

Objectives:- To gradually liberalize the trade among

members of SAARC To eliminate trade barriers among SAARC

countries & reduce or eliminate tariffs To promote and sustain mutual trade &

economic cooperation among member countries

F. MERCOSUR; Mercado Comun del Cono SurF. MERCOSUR; Mercado Comun del Cono Sur

• Established in 1991 by Brazil, Argentina, Paraguay, Uruguay.

• These four members generate 70% GNP of South America.

• By 1996, MERCOSUR had abolished tariffs on goods accounting for 90% of the trade between its members countries, with remaining tariffs to be abolished by 2000.

• MERCOSUR & EU Signed a cooperation agreement to pave the way for a free trade accord in 2001.