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Regional Trade Blocs
Prepared by
Pradipti Chanda
VtP 0629
Regional trade blocks are inter governmental associations that
manage and promote trade activities for specific regions of the
world.
They have political as well as political implications for example
the European union, the worlds largest trading block has
harbored political ambitions. The Maastricht treaty which gave
birth to EU calls for joint policies in regard to military, defense
and citizenship.
Introduction
Major trade blocks
European Union (EU)
North American free trade agreement (NAFTA)
Singapore – American free trade agreement (SAFTA)
Organization of Petroleum exporting countries (OPEC)
Association of South East Asian Nation (ASEAN)
South Asian Association of Regional Cooperation (SAARC)
Debate on Trading Blocks
There are 2 views
1. Analyst like preeg argue that trade blocs are desirable because
they compliment global trade.
2. Other analyst argue that trade blocs are not desirable because
they are threat to free trade and need to prootectionism.
Reasons of trade blocs
Trade blocs complement global trade.
They protect intra regional trade form outside forces.
They establish regional security.
Why trade blocs are undesirable
• Imports quotas (limiting the amount of imports into the country
so that domestic consumers buy products made by their
countries in their region).
• Custom delays (establishing bureaucratic formalities that slow
down trade from the other region)
• Subsidies barrier (giving heavy subsidies to protect regional
trade)
• Voluntary boycotts and technical barriers.
South Asian Association of Regional Cooperation (SAARC)
The South Asia Association for Regional Cooperation (SAARC) was
established when its charter was formally adopted on December 8,
1985 by the Heads of State of Govt. of Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan & Sri Lanka.
SAARC provides a platform for the peoples of South Asia to work
together in a spirit of friendship, trust ad understanding. It aim to
accelerate the process of economic and social development in
member states.
SAARC
Areas of Cooperation
• Agriculture & Rural development
• Health & Population Activities
• Women, Youth & Children
• Environment & Forestry
• Science & Technology & Meteorology
• Human resource Development & Transport
• Recently, high level working groups have also been established
to strengthen cooperation in the areas of Information &
Communications Technology, Biotechnology, Intellectual
Property Rights, Tourism, and Energy.
Established Centers
SAARC Agricultural Information Centre (SAIC), Dhaka
SAARC Meteorological Research Centre (SMRC), Dhaka
SAARC Tuberculosis Centre (STC), Kathmandu
SAARC Documentation Centre (SDC), New Delhi
SAARC Human Resource Development Centre (SHRD)
SAARC Coastal Zone Management Centre, Maldives
SAARC Information Centre, Nepal
SAARC Energy Centre, Pakistan
SAARC Disaster Management Centre, India
SAARC
• Born in 1985
• 7 members countries Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan & Nepal.
• It has 1.3 billion inhabitants
• Represents 22% of the world population but only 1.9% of the world
GNP.
• SAARC has been a sheer failure.
• The total external trade of the region – 0.8% of world exports and 1.3%
of world imports.
• The reason being political dispute between member countries.
• Still some progress has been achieved.
• SAPTA (South Asia Preferential Trading Agreement) has come into force
in 1995.
• Consensus on SAFTA (South Asian Free Trade Area) has been reached.
NAFTA
NAFTA
The North American Free Trade Area is the trade bloc in
North America created by the North American Free Trade
Agreement (NAFTA) and its two supplements, the North
American Agreement on Environment and The North
American Agreement of Labor Cooper (NAALC), whose
members are Canada, Mexico and the United States. It
came into effect on 1st January, 1994.
NAFTA Secretariat
The NAFTA Secretariat, comprised of a Canadian Section, a
Mexican section and a United States Section, is responsible for
the administration of the dispute settlement provisions of the
North American Free Trade Agreement (NAFTA).
NAFTA
Born in January 1994
Member nations: US, Canada & Mexcio
It’s the world largest free trade area
Under NAFTA, all non tariff barriers to agriculture were eliminated.
Many tariffs are being eliminated over a period of 5-15 yrs.
2 way trade between US & Mexico has increased by more than 55%.
2 way trade between US & Canada increased more than 50%.
Huge benefits have accrued to the NAFTA member countries.
NAFTA has been a roaring success.