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By-

Prof. Sunil Garg

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` Post Second World War period Need and interest

arises in integrating national economies at regional

level.

` A trade block is a type of intergovernmental

agreement where regional barriers to trade (tariffs

and non-tariff barriers) are reduced or eliminated

among the participating states.

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` Creating business opportunities`Avoiding Unnecessary Competition` Sharing Resources Goods, Services,

Investment, Manpower, etc.` Increases Market Size` Eliminating trade restrictions among member

countries`

Reduce Custom & Tariffs and eliminate themgradually

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` Integration: Economic & Regional Approach

` Member by Number: G7/G8 (developedcountries), G77 (developing countries) and

G20 (active group within developingcountries)

` Member by Name: Commonwealth, OECD Organization for Economic Corporation &

Development, and ESCAP- Economic &Social Commission for Asia & Pacific

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Type of Economic GroupingsDifferent level of integration: trade, currency &

political systems of the countries.

Alternative

Forms

Removal of

Tariff

Barriers

On Inter-Trade

Common

External

Tariff

Free

Movement of

Labour &

Capital

Harmonizati

on of

Economic

Policies

Free Trade

Area

Yes No No No

Customs

Union

Yes Yes No No

Common

Market

Yes Yes Yes No

Economic

Union

Yes Yes Yes Yes

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Emergence:- European Coal and Steel Community (ECSC) Formed by six

countries West Germany, France, Italy, Belgium, Netherlandsand Luxembourg in 1952

- E

uropeanE

conomic Community (EE

C) Six membercountries Belgium, France, Germany, Italy, Luxembourg andNetherlands originally formed intothe EEC by the treaty ofRome,1957. It came into force on 1st Jan1958. The number ofmember countries of the EEC increased from six to nine onJan1, 1973 as United Kingdom, Ireland and Denmark joined thecommunity

- European Union - 27 member states in 2005 The largest,most developed consumer market in the world, accounts forabout 40 per cent of world trade.

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` Elimination of internal duties` Establishment of common barrier` Removal of restrictions on factors of production,` Harmonization of national economic policies` Responsible for the development of EU Single

International Market.` Single Currency Economy & Monetary Union

(EMU) Euro

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Benefits Achieved:` Efficiency Gain` Economic Growth` Elimination of Currency Risk` Lower Transaction Cost`

Capital Mobility` Stable Prices` Challenges: Deepening of Integration, Expansion of Membership & Balancing of

Two

Convergence criterion for participation in Single Currency:` Annual inflation

` Public-sector budget deficit` Public-sector budget debts` Long term interest rates` Common Exchange rate

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` NAFTA North American Free Trade Agreements

` APEC Asia-Pacific Economic Cooperation

` ASEAN Association of South-East Asian Nations

`

SAARC- South Asian Association of RegionalCooperation

` SAFTA South Asian Free Trade Area

` CARICOM-Caribbean Community and Common Market

` IRAARC Indian Ocean Rim Association for Regional

Cooperation

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` GATT / WTO

` UNCTAD United National Conference on Trade& Development

` World Bank Development Projects, Groups: IFC,IDA and MIGA(Multilateral Investment GuaranteeAgency)

` IMF Monitoring Stability provide short term

loans for balance of payment

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` Work only for the interests of developing countries` Forum for developing countries to discuss their problems

` Meeting every four year

` Members include developing and developed countries

` Currently, UNCTAD has 193 member States and isheadquartered in Geneva, Switzerland. UNCTAD has400 staff members and an annual regular budget ofapproximately US$50 million and US$25 million of extrabudgetary technical assistance funds.

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`Aim of WTO is to promote no-discriminatorymultilateral trading system

` Under Regional Groupings, countries have to

accord normally special status to tradebetween member countries` WTO set up CRTA Committee on Regional

Trade Agreements`

Each member of WTO has to report on thesematters periodically