Group 1 - Trade Blocks

8/13/2019 Group 1 - Trade Blocks

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REGIONAL TRADE BLOCKS

Presented By:

Aashutosh Gupta (410)

Jinal Punjani (419)

Sandeep Sayal (421)

Aparajita Sharma (422)

Pulkit Sinha (423)

Rahul Surana (424)


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Introduction to Regional Trade

Blocks

& ASEAN

- Sandeep Sayal (421)


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Regional Trade Blocks

Regional trade blocks are intergovernmental associations that

manage and promote trade activities for specific regions of

the world.

Example : EU,NAFTA, ASEAN, Mercosur, GCC, SAARC, SAFTA,

OPEC, etc

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NEED FOR TRADE BLOCS

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Compliment Global Trade

Protect Intra Regional Trade from outside forces

Establish Regional Security

Improves the relationship with the neighbouring countries

Promotion of specialization in production of certain goods

Meeting the demand of neighbouring countries or group members

Boosts countries to develop economic alliances to gain buying and selling power

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Demerits of Trade blocs

Price offered within the block is lower as compared to theglobal prices. Thus, no level playing field

Import QuotaLimiting the amount of imports so as toensure domestic consumption of products manufactured in

their country/region

Custom DelaysEstablishing Bureacratic formalities

Subsidies BarrierHeavy subsidies to protect regional trade

Voluntary Boycotts and Technical Barriers

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4 December 2013

Globalization

Localization

Regionalization

Regionalization: The Right Balance

ICT has allowed wide information access.

Goods and services can move cheaper

thanks to cheap transportation and ICT.

The world is more borderless.

In a flat world, competition searches for

lowest cost.

National borders still have economic

meaning.

National markets exist and are defined by

psychology and politics.

National economic and political setbacks can

threaten globalization.

Convenience of flows of information, goods,

services, and people within the region

Relatively similar psychology and national

interest within region

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The paradox has forced countries to form regional blocs

Source:

Wikipedia.com

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http://upload.wikimedia.org/wikipedia/en/4/43/ActiveBlocs.PNG


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ASEAN

Association of Southeast Asian Nations

Established on 8thAugust 1967

HQ- Jakarta, Indonesia

Founders of ASEAN: Indonesia, Philippines, Malaysia, Singapore, Thailand.

Later joined by Brunei, Myanmar, Vietnam, etc.

To accelerate the economic growth, social progress and cultural development in

the region through joint endeavors; and

To promote regional peace and stability through abiding respect for justice and

the rule of law.

GDP: PPPUS $3084 Trillion ; NominalUS $1800 Trillion Functioning Based on 2 principles:

1.Musyaurarah(Consensus).

2.Mufakat(Consultation)

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Regional Inter-governmental

Organization

10 members

4.5million sq kms

600+ Million people (growth 2%)


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ASEAN Countries at a Glance

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ASEAN Objectives

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Political, security, economic, socio-cultural cooperation

Enhance peace, security stability

Preserve as nuclear weapons free zone

Strengthen democracy, protect and promote human rights

Single market and production base

Promote sustainable development

Peace with the world, harmonious environment

Develop human resources

Alleviate poverty, narrow development gap

Respond to common threats

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ASEAN: Stages of Development

First 10 years (1967-1976): establishment, solidarity,

dialogue partners

The next 20 years: (1977-1997): expansion- Brunei

(1984); Vietnam (1995); Lao PDR and Myanmar(1997); and Cambodia (1999)

The next 10 years: (1998-2007): vision, formalization

The next 7 years: (2008-2015): Community building

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ASEAN Economic Blueprints

Single market and production base, Highly competitive economic region,

Region of equitable economic development, and

Region fully integrated into the global economy

Priority Integration Sectors: Agro-based products, Air travel,Automotives, Electronics, Fisheries, Healthcare, etc

ASEAN Free Trade Area Launched in January 1992

To eliminate tariff barriers among South East Asian countries with aview of integrating the ASEAN economies into a single production baseand creating a regional market of more than 500 Million people

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Whyis ASEAN in the Driving Seat of the Greater East Asia?

Neutral

Position

ASEAN

High

Bargaining

Power

Attractive Single

Regional Market

Competitive

Regional

Production Base

Huge market

High consumption

Less competitive

Smooth flow of

goods, services, and

people under FTA

Abundance of natural

resources

Low labor cost

ASEAN is not considered a

threat to China, India,

Japan, South Korea,

Australia, and NewZealand

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What does ASEAN Integration Mean?

Tariffs will be eliminated and non-tariff barrierswill be gradually phased out

Rules and regulations will be simplified and

harmonized

ASEAN investors will be permitted to invest in

sectors formerly closed to foreigners and the

services sector will also be opened up

All barriers to the free

flow of goods, services,

capital, and skilled labor

are removed

The region will become amore level playing field

Applicable international standards and

practices are followed, and policies on

intellectual property rights and competition are

put in place Regional infrastructure will be more developed

with the expansion of transportation,

telecommunications and energy linkages

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Corporate Trends Supporting ASEAN Integration

Global trends in manufacturing indicate a shift towards adopting

flexible production techniques and integrated production chains

It is no longer cost effective for all manufacturing activities to be done in in-

house or in a single country

MNCs are integrating their manufacturing activities across several locations

MNCs are not only seeking large consumer markets but also regional sites

where they can establish efficient production networks

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Potential Cost Savings from ASEAN Integration

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Benefits to MNCs

Targeting more sales

volume in the ASEAN

market

Components

procurement on anASEAN-wide basis

More product

specialization to

achieve economies of

scale

Greater emphasis onprofitability using

ASEAN-wide

operations

Benefits to Local

Companies

More export

opportunities to

ASEAN market

ASEAN-wideexpansion opportunity

for corporate growth

strategy

Technology and

financial support

opportunities fromMNCs

ASEAN-wide pool of

talent

A Balanced Approach is Needed

A Balanced Approach

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EUROPEAN UNION (EU)

- Pulkit Sinha (423)


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The EU Headquarters

Brussels, Belgium

Selected as theheadquarters of theEuropean Union

because of itscentralized location inEurope.

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EU Goals

Is a unique economic and political partnership between 27European countries.

To continue to improve Europes economy by regulating tradeand commerce.

To form a single market for Europe's economic resources inwhich people, goods, services, and capital move amongMember States as freely as within one country

As these goals were accomplished, other goals weredeveloped: Environmental movements Regulatory acts Human rights concerns.

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Member Countries of the EU (year of

entry)

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The History of the EU

The European Union was set up with the aim ofending the frequent and bloody wars betweenneighbours, which culminated in the SecondWorld War.

In 1950 the European Coal and Steel Communitywas formed.

The founding members of the Communitywere Belgium, France, Italy, Luxembourg,the Netherlands, and West Germany

Aim - eliminating the possibility of further warsbetween its member states by means of pooling

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In 1957, the six countries signed the Treaties of

Rome which created theEuropean Economic

Community, (EEC) establishing a customs union

and the European Atomic EnergyCommunity(Euratom) for cooperation in

developing nuclear energy.

Denmark, Ireland and the United Kingdom jointhe European Union on 1 January 1973, raising

the number of member states to nine.

Greece joined in 1981, Portugal and Spain in 19864 December 2013 26


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In 1986 the Single European Act is signed. This is atreaty which provides the basis for a vast six-yearprogramme aimed at sorting out the problems with thefree-flow of trade across EU borders and thus creates

the Single Market The European Union was formally established whenthe Maastricht Treatycame into force on 1 November1993,and in 1995 Austria, Finland and Sweden joinedthe newly established EU.

In 2002, euro notes and coins replaced nationalcurrencies in 12 of the member states.

On 1 December 2009, the Lisbon Treatyentered intoforce and reformed many aspects of the EU.

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EU Institutions

There are 3 main institutions involved in EU legislation:

1. the European Parliament, which represents the EUs citizensand is directly elected by them;

2. the Council of the European Union, which represents thegovernments of the individual member countries. It is the EUsmain decision-making body

3. the European Commission, which represents the interests ofthe Union as a whole. 27 Commissioners each responsible fora specific policy area

Two other institutions play vital roles:

the Court of Justice- Highest EU judicial authority, ensures allEU laws are interpreted and applied correctly and uniformly

the Court of Auditorschecks the financing of the EU's activities.

The powers and responsibilities of all of these institutions are laiddown in the Treaties.

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Money and the EU

Revenue/Income- The EU obtains revenue notonly from contributions from member countriesbut also from import duties on products fromoutside the EU and a percentage of the value-added tax levied by each country.

Expenditure - The EU budget pays for a vast array

of activities from rural development andenvironmental protection to protection ofexternal borders and promotion of human rights.

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EU Facts and Figures

GDP (12,268,387 million 2010)

7% of the worlds population

EU's trade with the rest of the world accounts for

around 20% of global exports and imports EU is the worlds biggest exporter and the

second-biggest importer.

Unemployment has increased in the wake of therecent economic and financial crisis and nowstands at 7.5% in the EU.

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Joining the EU

is a complex procedure Any country that satisfies the Copenhagen criteria can

apply.

Copenhagen criteria - Membership requires that

candidate country has achieved stability of institutionsguaranteeing democracy, the rule of law, human rights,respect for and protection of minorities, the existenceof a functioning market economy as well as the

capacity to cope with competitive pressure and marketforces within the Union.

Submit a membership application to the Council

If the Commissions opinion is positive the country

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Addressing Global

Challenges

Peace & Security

Works for global peace and security alongside

the United States and multilateral organizations

including NATO and the United Nations.

Undertakes humanitarian and peacekeepingmissions and has provided military forces for

crisis management around the globe.

Counterterrorism & Homeland Security

Taken steps to improve intelligence sharing,enhance law enforcement and judicial

cooperation, curtail terrorist financing.

Boosts trade and transport security to support

the struggle against terrorism.

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Addressing Global

Challenges

Democracy & Human Rights

Works globally for free elections and open

democratic processes.

Fights racism and intolerance at home and abroad.

Campaigns globally against capital punishment.

Development Assistance & Humanitarian Relief

The EU and its Member States are the worlds

largest aid donor, providing 55% of total official

development assistance.

Provides billions of dollars in humanitarian aid tomore than 100 countries in response to crises and

natural disasters.

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Addressing Global

Challenges

Trade

European Commission represents all 27 EU Member

States before the World Trade Organization.

Supports free trade and open markets, within the

rules-based structure of the WTO, to promote

growth and jobs in both industrialized and

developing countries.

The world's most open market for products and

commodities from developing countries40% of allEU imports are from developing countries.

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Addressing Global

Challenges

Environmental Protection

A leader in global efforts to protect the

environment, maintaining rigorous and

comprehensive systems at home.

Plays a key role in developing and

implementing international agreements,

such as the Kyoto Protocol on Climate

Change.

Executing a cap and trade system to

reduce greenhouse gas emissions Takes the lead in the fight against global

warming with the adoption of binding

energy targets (cutting 20% of the EUs

greenhouse gas emissions by 2020).

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Comparison of Growth in GDP

EU vs US

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NAFTA

(North American Free Trade Agreement)

By

Rahul SuranaRoll No: 424


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Introduction

An agreement signed by the governments of (a trilateral block in North America): Canada

Mexico

United States

Eased restrictions on commerce between the members by providing duty-free

trade on multiple classes of goods and introducing new regulations to encouragecross-border corporate investment.

The agreement came into force on January 1, 1994.

In terms of combined GDP of its members, as of 2010 it is the largest trade block.

It has two Supplements:

NAAEC (North American Agreement on Environmental Cooperation)

NAALC (North American Agreement on Labour Cooperation)

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Chronology of Events

1988: Canada and United States signed the Canada-United

States Free Trade Agreement.

American Government then entered into a similar treaty with

Mexican Government.

Canada was asked to join the treaty in order to preserve its

perceived gains under the 1988 deal.

The agreement was signed by: U.S President: George H.W. Bush

Canadian Prime Minister: Brian Mulroney

Mexican President: Carlos Salinas

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Objectives

To eliminate trade barriers & facilitate the cross-border movements ofgoods and services between the parties

To promote conditions of fair competition

To substantially increase investment opportunities

To provide adequate and effective protection & enforcement ofintellectual property rights in each territory

To create effective procedures for the implementation and application of

this agreement ,for its joint administration & for resolution of disputes

To establish a framework for further trilateral, regional and multilateralco-operation to expand and enhance benefits of this agreement

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NAFTA's Winners And Losers

Mexico:

Increase in US Investments in Mexico.

Significant increase in FDI in Mexico

Export of US Parts to Mexico: Cheap Labour Advantage

Corporate Investment: Mexican Middle Class vs. China

Migration of Workers from Mexico

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Canada:

U.S. investment in automotive production

Increases in oil exports to the U.S. and the rest of the world

Increases in shipment of beef, agricultural, wood and paper products to the U.S.

Export of mineral and mining products, which have fared well in U.S. markets.

Sectors such as Steel and Processed food has been hit due to U.S Imports

U.S. investment provided higher-paying jobs: This added to the ranks of the Canadian middle class and increased the

level of secondary education in the population.

It also provided jobs for the wave of immigrants from India and Pakistan

who are currently residing in Canada.

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United States:

MNCs have benefited the because of cheap labour and new investment options.

Jobs have been substituted by Canadians and Mexicans.

Overall Impact:

Between 1993 and 2006, trade among NAFTA partners climbed 197%, from $297

billion to $883 billion.

U.S. exports to NAFTA partners grew 157%, versus 108% to the rest of the world

in the same period.

Daily NAFTA trade in 2006 reached $2.4 billion.

U.S. manufacturing output rose 63% from 1993-2006, compared to an increase

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South Asian Association for

Regional Cooperation (SAARC)

- Aparajita Sharma (422)

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SAARC

Came into existence in 1985with the adoption of itsCharter at the first Summit in Dhaka (7- 8 December1985)

Seven South Asian countries Bangladesh, Bhutan,India, the Maldives, Nepal, Pakistan and Sri Lanka

HeadquartersKathmandu , Nepal

First adopted by Bangladesh under President Ziaur

Rahman

Current Secretaries General - Fathimath DhiyanaSaeed

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Seven Member Countries

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Principles

Respectfor sovereignty, territorial integrity, political

equality and independence of all members states

Non-interference in the internal matters is one of its

objectives

Cooperation for mutual benefit

All decisions to be taken unanimouslyand need a

quorum of all eight members

All bilateral issues to be kept aside and onlymultilateral(involving many countries) issues to be

discussed without being prejudiced by bilateral issues

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16 Areas of Cooperation

Agriculture and rural

Biotechnology

Culture

Energy

Environment

Economy and trade

Finance

Funding mechanism

Human resource development

Poverty alleviation

People to people contact

Security aspects

Social development

Science and technology

Communications, tourism

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Members at a Glance

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Objective

To promote the welfare of the people of south asia andto improve their quality of life

To accelerate economic growth, social progress andcultural development in the region and to provide all

individuals the opportunity to live in dignity and torealize their full potential

To promote and strengthen selective self-reliance amongthe countries of south Asia

To contribute to mutual trust, understanding andappreciation of one another's problems

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Objective

To promote active collaboration and mutual assistance

in the economic, social, cultural, technical and scientific

fields

To strengthen cooperation with other developing

countries

To strengthen cooperation among themselves in

international forums on matters of common interest

To cooperate with international and regionalorganisations with similar aims and purposes

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Administrative setup

Summits held annually,represented by head of the states The Council of Ministers comprising Foreign Ministers, meets

at least twice a year

Formulating policy, reviewing progress of regionalcooperation, identifying new areas of cooperation

The Standing Committee comprising Foreign Secretaries,monitors and coordinatesSAARC programmes ofcooperation, approves projects including their financing andmobilizes regional and external resources. It meets as often asnecessary and reports to the Council of Ministers

The Committee on Economic Cooperation consisting ofSecretaries of Commerce oversees regional cooperation in theeconomic field

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SAPTA

South Asian Preferential Trade Arrangement

Deals with Tariffs, Paratariffs, Non-TariffMeasures and Direct Trade Measures

In December 1991, the Sixth Summit held inColombo member countires agreed toformulate an agreement to establish a SAARCPreferential Arrangement (SAPTA) by 1997.

Agreement on SAPTA was signed on 11 April1993 and entered into force on 7 December1995

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SAPTA

The basic principles underlying SAPTA are: overall reciprocity and mutuality of advantages so as to benefit

equitably all Contracting States, taking into account their respectivelevel of economic and industrial development, the pattern of theirexternal trade, and trade and tariff policies and systems;

negotiation of tariff reform step by step, improved and extended insuccessive stages through periodic reviews;

recognition of the special needs of the Least Developed ContractingStates and agreement on concrete preferential measures in theirfavour; and

inclusion of all products, manufactures and commodities in their raw,semi-processed and processed forms.

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Trade ConcessionsNumberofProducts covered and the Depth of Preferential Tariff Concessions agreed to by SAARCMember States in the first three rounds of trade negotiations under SAPTA

Country # Products Depth of

concessions

Bangladesh 572 10% -15%

Bhutan 266 10-20%

India 2402 10-100%

Maldives 390 5-15%

Nepal 425 10-15%

Pakistan 685 10-30%

Sri Lanka 211` 10-75%

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South Asian Free Trade Area (SAFTA)

SAPTA first step towards the transition to a South Asian Free Trade Area(SAFTA) leading subsequently towards a Customs Union, Common Marketand Economic Union.

The Agreement on South Asian Free Trade Area (SAFTA) was signed on 6January 2004 during the Twelfth SAARC Summit in Islamabad.

The Agreement into force from 1 January 2006 Trade Liberalisation Programme scheduled for completion in ten years by2016,

the customs duties on products from the region will be progressivelyreduced.

under an early harvest programme for the Least Developed Member

States, India, Pakistan and Sri Lanka are to bring down their customsduties to 0-5 % by 1 January 2009 for the products from such MemberStates.

The Least Developed Member States are expected to benefit fromadditional measures under the special and differential treatment accordedto them under the Agreement.

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South Asian Economic Union

Eleventh Summit (Kathmandu, 4-6 January

2002) - economic cooperation

Leaders agreed to accelerate cooperation in

the core areas of trade, finance andinvestment to realise the goal of an integrated

South Asian economy in a step-by-step

manner.

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16thSAARC summit

Held in Thimpu, Bhutan

Main issueClimate Change

Bhutanese Prime Minister and the newly elected Chairman of

SAARC Jigmi Y. Thinley said the summit has achieved their

agenda of regional cooperation with the signing of the Thimphu

Statement on Climate Change.

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Current Issues

Working toward creation of SAFTA

Leading subsequently, towards a Customs Union,

Common Market and Economic Union.

Technical Committee on Transport Agreement on Investment

Agreement on avoidance of double taxation

Standards, quality and control group

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Gulf Co-operation Council (GCC)

- Jinal Punjani (419)


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Introduction - GCC

The Cooperation Council for the Arab States of the

Gulf, also known as the Gulf Cooperation

Council(GCC)is a political and economic union of

the Arab states bordering the Persian Gulf and

located on or near the Arabian Peninsula. Member Countries: Bahrain, Kuwait, Oman, Qatar,

Saudi Arabia, and united Arab Emirates.

Jordan and Morocco have been invited to join the

council

It was created on 25 May 1981 and the unifiedeconomic agreement between the countries of the

GCC was signed on 11 November 1981 in Abu

Dhabi.

These countries are often referred to as The GCC

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Objectives

Formulating similarregulations in various

fields such as economy,

finance, trade, customs,

tourism, legislation, andadministration;

Fostering scientific and

technical progress in

industry, mining,

agriculture, water and

animal resources;

Establishing a commoncurrency by 2010.

Setting up joint venturesand scientific research

centres; Unified military presence

(peninsula shield force)

Encouraging cooperation

of the private sector; Strengthening ties

between their peoples;

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Features and key developments

Oman announced in December 2006 it would not be able to meetthe target date for establishing the common currency

The UAE announced their withdrawal from the monetary union

project in May 2009.

The name Khaleeji has been proposed as a name for this currency

This area has some of the fastest growing economies in the world

including Abu Dhabi Investment Authority, retain over $900 billion

in assets.

The region is also an emerging hotspot for events The leaders of the Council have come under fire for doing too

little to combat the economic downturn

Recovery plans have been criticized

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Related States

Iraq

The associatemembership of

Iraq wasdiscontinued afterthe invasion ofKuwait.

There is a very low

possibility of Iraqiaccession to theGCC

Yemen

Yemen is innegotiations for

GCC membership,and hopes to joinby 2016

The Council issueddirectives that

Yemen would havethe same rightsand obligations

Jordan &Morocco

In May 2011requests

by Jordan and Morocco to join werewelcomed by themembers of theGCC

The currentmembers seethem as strongpotential allies

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Organisations

The GCC Patent Office was approved in 1992 and establishedin Riyadh

A GCC Patent cannot co-exist with a national application in any ofthe member states

PatentOffice

A GCC common market was launched on 1 January 2008.National treatment to all GCC firms and citizens in any other GCC

country

A customs union was declared in 2003

CommonMarket

Kuwait, Saudi Arabia, Bahrain and Qatar on 15 December 2009announced the creation of a Monetary Council

Oman and the UAE later announced their withdrawal of the proposedcurrency until further notice.

MonetaryCouncil

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Financial and Monetary Integration

The GCCs financial sector is dominated by banking,

with relatively high concentration among domestic

players.

In all six countries, the largest five banks aredomestic and account for 50 to 80 percent of total

banking sector assets.

Islamic banks have become an important source of

intermediation, controlling on average 24 % of theregions banking system assets.

NBFCs have limited presence in the GCC

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Financial and Monetary Integration

Financial Markets

vary in regulatory regimes and in the level of openness toforeign participation

There is evidence, however, of increased financial sectorintegration in the GCC

Financial Sector

Little impetus at the GCC level for coordination of strategies

Weaknesses

Establishment of a monetary union

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The GCC Economic Outlook 2012

With a recession now on the cards in Europe, globalgrowth will slow to 3.2 percent next year.

Oil markets are likely to weaken

GCC real GDP growth is expected to surge to 7 percent in2011 on the back of increased oil production and soaring

oil revenues.

Although government spending has risen sharply and oil

prices are expected to decline, GCC states (exceptBahrain) are still projected to run healthy fiscal and

current account surpluses in 2012

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The World Economy

Increased risk and uncertainty

Global growth will slow

Oil market outlook

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Implications for the GCC

A more risky

and challenging

environment

Tighter global

financial

conditions

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Implications

Continuation of loosemonetary policy and

exchange rate peg

Current account

surpluses will boost

external assets

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Global Challenges for the GCC


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Global Challenges for the GCCcountries

Collectiveoil reserves

Existing skillbase forworkers

Educationand

innovation

Leadershipand

Governance

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Mercosur/Mercosul

Southern Common Market

- Aashutosh Gupta (410)

Introduction
http://en.wikipedia.org/wiki/Image:Mercosur.png


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Introduction

Mercosur takes its name from Mercado Comun Del Sur(Spanish for Common Market of the South). It is alsosometimes referred to as the Southern Cone CommonMarket.

The bloc comprises a population of more than 270million people, and the combined Gross DomesticProduct of the full-member nations is in excess ofUS$3.0 trillion a year according to International

Monetary Fund numbers, making Mercosur the fifth-largest economy in the World.

It is the fourth-largest trading bloc after the EuropeanUnion

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A Brief History


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A Brief History 1991- Treaty of Asuncion- free trade zone by 1994

1994- Treaty of Ouro Preto- further solidified Mercosur

December 2004- signed a cooperation agreement and a joint

letter of intention for future negotiations with the AndeanCommunity trade bloc (CAN) to potentially unite South Americaeconomically.

Mercosur does not, however, show interest in joining the FreeTrade Area of the Americas.

Today, Mercosur is the largest trading bloc in South Americaand the fourth largest economy in the world.

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MERCOSUR FACTFILE
http://en.wikipedia.org/wiki/Image:Mercosur.pnghttp://en.wikipedia.org/wiki/Image:Mercosur.png


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MERCOSUR FACTFILE

Establishment: Treaty of Asuncion, 26 March 1991

Protocol of Ouro Preto, 16 December 1994

Number of Countries: 4

Members: Argentina, Brazil, Paraguay, Uruguay

Associate Members: Bolivia, Chile, Colombia, Ecuador, Peru,Venezula

Headquarter: Montevideo, Uruguay

Official languages: Spanish, Portuguese

Combined GDP: US$ 3 trillion

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LEADING TRADE BLOCK OF South America

Interests


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InterestsMercosurs primary interest is

eliminating obstacles to internal trade.

Also attempts to balance theactivities of other global economic

powers such as NAFTA and the EU.

Enlarge the national markets to bemore competitive both at the regionaland global level.

Build a common ground of politicalstabilityand democracy with the ideaof competing and negotiating together

at the global level.

Objectives


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ObjectivesThe Southern Common Market promotes:

1) The free transit of produced goods, services and factors amongthe member states.

2) Fixing of a common external tariff (CET) and adopting of acommon trade policy with regard to non-member states or groupsof states.

3) Coordination of macroeconomic and sectorial policies ofmember states relating to foreign trade, agriculture, industry, taxesand any others they may agree on, in order to ensure free competitionbetween member states

4) The commitment by the member states to make the necessaryadjustments to their laws in pertinent areas to allow for thestrengthening of the integration process

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Structure


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Structure

The Asuncion Treaty and Ouro Preto Protocol established

the basis for the institutional Mercosur structure, creatingthe Common Market Council and the Common MarketGroup, both of which are to function at the outset of thetransition phase.

Common Market Council

Common Market Group

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Highest-level agency of Mercosur with authority to

conduct its policy, and responsibility for compliancewith the objects and time frames set forth in theAsuncion Treaty.

The Council is composed of the Ministries of Foreign

Affairsand the Economy of all five countries Member states preside over the Council in rotating

alphabetical order, for 6-month periods.

Meetings:

Council members shall meet whenever necessary, but atleast once a year

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Common Market Group


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The Group is the executive body of Mercosur, and is coordinated bythe Ministries of Foreign Affairs of the member states.

Its basic duties are to cause compliance with the Asuncion Treaty andto take resolutions required for implementation of the decisions madeby the CouncilComposition:

The Common Market Group shall be made up of four permanent

members and four alternates from each member state, representingthe following public agencies(i) the Ministry of Foreign Affairs (ii) the Ministry of Economy and (iii)

the Central BankMeetings:

The Common Market Group will meet ordinarily at least once everyquarterin the member statesDecision Making:

Common Market Group decisions shall be made by consensus, withthe representation of all member states

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Free trade zones


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Free trade zones

The member nations can have commercial free-tradezones, industrial free-trade zones, export processingzones, and special customs areas, all of which targetproviding merchandise marketed or produced in these

areas with treatment different from that afforded in theirrespective customs territories

Tariffs

Safeguards

Incentives

Creation

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Issues

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Issues Contd.


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Issues Contd.

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1). When Brazil's car industry became increasingly competitive,

aided by the devaluation of its currency in 1999, Argentinaresponded by imposing tariffs on Brazilian steel imports. Thespat was resolved in December 2000 when the two countriessigned a bilateral agreement to end the crisis.

2). In 2006, Argentina and the bloc's smallest country Uruguayclashed over plans to build two large pulp mills along the border- the biggest foreign investments Uruguay had ever attracted.Argentina said it feared pollution and the impact on tourism andfishing.

The matter went to the International Court of Justice (ICJ), whichruled in favor of Uruguay. Argentina pledged to continue its fightagainst the mills.

Issues Contd.


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Issues Contd.

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3). The bloc's smaller members, Paraguay and Uruguay,complain of restricted access to markets in Argentina and

Brazil and have sought to set up bilateral trade deals outside

Mercosur. The organization's rules forbid this.

4). Negotiations on a planned, US-backed Free Trade Area of

the Americas (FTAA) are similarly mired, with some

Mercosur leaders rejecting US free-market policies.


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Trade in Goods


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Trade in Commercial Services


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Foreign Direct Investment


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g

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Future


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Mercosur, the "Common Market of the South" is an

economic initiative that offers promise of economicdevelopment. Begun in 1991 as an economic agreementbetween four nations in the Southern Cone, Mercosurmade large gains in regional trade during its initial years.

As the global economy began lagging at the turn of thecentury, proponents for Mercosur have had a moredifficult time arguing its benefits.

Should Mercosur survive this test, it could emerge

stronger and continue to expandalong the same linespolitically and militarily as the European Union.

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Thank You

Documents

Group 1 - Trade Blocks