Different Trade Blocs

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What is a Trade Bloc?

A group of countries

→ Which are geographically close to each other→ Have similar trade policies→ With their mutual co-operation allow free flow of goods

Trade blocs have liberal rules for the member countries and separate set of rules for the non-member countries

They facilitate trade to member countries of the group but create barriers and block the trade of member countries

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Types of Trade Blocs

Trade Blocs

Free Trade Area

NAFTA SAARC

Customs Union

CACM

Common Market

OPEC

Economic Union

EU ALADI

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Features of Trade Blocs

Voluntary in Character

Mutual Negotiations

Regional in Character

Divisions based on political considerations

Existence based on usefulness

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Objectives of Trade Blocs

→ Reduction of trade barriers among the member countries

→ Maintaining better relations

→ Imposing barriers on non member countries

→ Promoting free transfer of labour, capital and other factors

→ Creating common currency and Central Bank

→ Collective Bargaining

→ Assisting member countries

→ Enhancing welfare of consumers

→ Generating competition

→ Promoting Higher Employment

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Positive Effects of Trade Blocs

→ Economic Integration

→ Co-operative Spirit

→ Expansion of Markets

→ Growth and Development of the region

→ Uniform policies

→ Increase in trade

→ Product and Market Development

→ Benefits to consumers of member countries

→ Free transfer of resources / factors

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Negative Effects of Trade Blocs

Negative effects are for the non-member countries

→ Common External Barriers

→ Absence of Collective Bargaining

→ Affects Competition

→ Affects global and international trade

→ High Tariffs

→ Import Restrictions

→ Loss of Political Sovereignty

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Trade Blocs & Intra-regional trade

Intra-regional trade means trade carried on within one trading blocs

Trade Blocs have contributed the following favorable factors for the growth of Intra-regional Trade

Removal of trade barriers

Transfer of labour and capital

Uniformity in political and economic policies

Close relations between members

Transport and other infrastructural facilities

Common external barriers on non members

Common economic policy

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NAFTA

NAFTA stands for North American Free Trade Agreement

An agreement signed by Canada, Mexico, and the United States

It came into force on January 1, 1994.

NAFTA has two supplements:

North American Agreement on Environmental Cooperation (NAAEC)

North American Agreement on Labour Cooperation (NAALC)

It is the most powerful trade bloc of the world

Intra-regional trade between the member countries is US $ 767 Billion

Type: Free Trade Area

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OPECOPEC stands for Organization of the Petroleum Exporting Countries.

An oil cartel whose mission is to coordinate the policies of the oil-producing countries.

It is headquartered in Vienna, Austria

Member Countries:1. Iraq2. Kuwait3. Iran 4. Saudi Arabia 5. Venezuela6. Libya7. United Arab

Emirates

8. Qatar9. Indonesia10.Algeria 11.Nigeria12.Ecuador13.Angola14.Gabon.

It was established on 14th September, 1960

Type: Common Market

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ASEANASEAN stands for Association of Southeast Asian Nations.

It was formed on 8th August 1967.

It is a political and economic organisation of ten countries located in Southeast Asia

Type: Economic Union Members:

1. Indonesia2. Malaysia 3. Philippines4. Singapore5. Thailand6. Brunei7. Myanmar8. Cambodia9. Laos10. Vietnam

It’s aims include:

→ Accelerating economic growth

→ Social progress

→ Cultural development among its members

→ Protection of regional peace and stability

→ Opportunities for member countries to discuss

differences peacefully

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SAARC

SAARC stands for South Asian Association for Regional Cooperation

Headquartered in Kathmandu, Nepal

It was established on 8th December 1985

Members:

1. Afghanistan 2. Bangladesh 3. Bhutan 4. India 5. Maldives 6. Nepal 7. Pakistan 8. Sri Lanka

The SAARC policies aim to promote:

Welfare economics

Collective self-reliance among the countries of South Asia

Accelerate socio-cultural development in the region

Develop good external relations

Type: Free Trade Area

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EUEU stands for European Union.

Came into existence on 1st January 1958

It is headquartered at Brussels, Belgium

It has 28 member countries:

1. United Kingdom2. Belgium3. Finland4. France5. Germany6. Netherlands7. Norway8. Poland9. Portugal 10. Greece and 18 more

In January 1999, a common currency € (Euro) was introduced

Type: Economic Union

EU offers financial aid to the developing countries

It is a strong trade bloc politically, industrially and economically

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CACMCACM stands for Central American Common Market.

Type: Customs Union

It was established on 15th December 1960.

Headquartered in Guatemala City.

It consists of 5 Central American member countries:

1. Guatemala 2. Honduras3. El Salvador4. Nicaragua 5. Costa Rica

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ALADI

ALADI is a Spanish abbreviation for Latin American Integration Association.

It replaced Latin American Free Trade Agreement (LAFTA)

Type: Economic Union

It was established on 12 August 1980

It has 13 member countries:

1. Argentina2. Bolivia3. Brazil4. Chile5. Colombia6. Cuba7. Panama

8. Mexico9. Paraguay10.Ecuador11.Peru12.Uruguay13.Venezuela

ALADI aims at Harmonious and balanced socio-economic

development Progressive establishment of a Latin-

American Common Market.

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