Economic

Geography
Major Economic Blocs of the World

Submitted To:
Amanat Ullah Khan
Associate Professor
Dept. Of Geography
University of Dhaka

Submitted By :
Ohi Ahmed (ZR 81)
Meftahul Hasan (ZR 91)

15 Ju66ne, 2014
Amanat Ullah Khan
Associate Professor
Department of Geography
University of Dhaka.
Subject: Letter of transmittal for Economic Geography course term-paper
Dear Sir,
This is the term paper prepared for the course Economic Geography. The title of the report is
Major Economic Blocs of the World which is a descriptive analysis of the major economic
or trading blocs around the globe.
This report has been prepared under your supervision. Without your permission, no part of
this report can or will be revealed. This report never has been, and never will be,
reproduced for any other IBA course.
We sincerely hope that we were able to fulfill the course requirements effectively through the
submission of this report. We have put in our best efforts to contribute towards the successful
completion of this report. We hope that you will accept our report and that it will reach your level
of expectations. We have tried to make the report as comprehensive as we possibly could but we
would appreciate your contacting us if you find any imprecision.
Sincerely,
Ohi Ahmed (ZR 81)
Meftahul Hasan (ZR 91)

Page | 2

Major Economic Blocs of the World

In general terms, international economic blocs are associations of nations at
a governmental level to promote trade within the bloc and defend its
members against global competition. Defense against global competition is
obtained through established tariffs on goods produced by member states,
import quotas, government subsidies, onerous bureaucratic import
processes, and technical and other non-tariff barriers. Since trade is not an
isolated activity, member states within regional blocs also cooperate in
economic, political, security, climatic, and other issues affecting the region.
In terms of their size and trade value, there are four major trade blocs and a
larger number of blocs of regional importance.
Economic bloc activities have political as well as economic implications. For
example, the European Union, the worlds largest trading block, has
harbored political ambitions extending far beyond the free trading
arrangements sought by other multistage regional economic organizations.
Indeed, the ideological foundations that gave birth to the EU were based on
ensuring development and maintaining international stability, i.e., the
containment of communist expansion in post World War II Europe. The
Maastricht Treaty which gave birth to the EU in 1992 included considerations
for joint policies in regard to military defense and citizenship. The decisions
reached by development policy makers on whether regionalism or globalized
trade should be pursued may influence a countrys earnings from trade.
Regionalism differs from globalization in the size and area of markets. From
the perspective of developing countries skeptical of free trade, regional trade
blocs offer some form of protection against an aggressive global market.
Advocates of worldwide free trade are generally opposed to trading blocs,
which, they argue, encourage regional as opposed to global free trade.
Scholars and economists continue to debate whether regional trade blocs are
leading to a more fragmented world economy or encouraging the extension
of the existing global multilateral trading system. Trade blocs can be standalone agreements between several states (such as the North American Free
Trade Agreement (NAFTA) or part of a regional organization (such as the
European Union). Depending on the level of economic integration, trade
blocs can fall into different categories, such as: preferential trading areas,
Page | 3

free trade areas, customs unions, common markets and economic and
monetary unions.

G-8
The Group of Eight (G8) was the name of a
forum for the governments of a group of eight
leading industrialized countries, that was
originally formed by six leading industrialized
countries and subsequently extended with two
additional members. Russia, which was invited
to join as the last member, was excluded from
the forum by the other members on March 24,
2014, as a result of its involvement in the 2014
Crimea crisis in Ukraine. Thus the group now
comprises seven nations and will continue to
meet as the G7 group of nations.

Membership: 8 states
Establishing Year: 1973

HISTORY: The forum originated with a 1975 summit hosted by France that
brought together representatives of six governments: France, West
Germany, Italy, Japan, the United Kingdom, and the United States, thus
leading to the name Group of Six or G6. The summit became known as
the Group of Seven or G7 the following year with the addition of Canada.
The G7 is composed of the seven wealthiest developed countries on Earth
(by national net wealth or by GDP). Russia was added to the group from 1998
to 2014, which then became known as the G8. The European Union is
represented within the G8 but cannot host or chair summit.
Structure and activities: By design, the G8 deliberately lacks an
administrative structure like those for international organizations, such as
Page | 4

the United Nations or the World Bank. The group does not have a permanent
secretariat or offices for its members.
The presidency of the group rotates annually among member countries, with
each new term beginning on 1 January of the year. The rotation order is:
France, the United States, the United Kingdom, Russia, Germany, Japan, Italy,
and Canada. The country holding the presidency is responsible for planning
and hosting a series of ministerial-level meetings, leading up to a mid-year
summit attended by the heads of government. The president of the
European Commission participates as an equal in all summit events.

Criticism:
Some criticism centers on the assertion that members of G8 do not do
enough to help global problems such as Third World Debt, global warming
and the AIDS epidemicdue to strict medicine patent policy and other issues
related to globalization. In Unraveling Global Apartheid, the political analyst
Titus Alexander described the G7, as it then was, as the 'cabinet' of global
minority rule, with a coordinating role in world affairs.

G-20
The Group of Twenty Finance Ministers and Central Bank Governors (also
known as the G-20, G20, and Group of Twenty) is a group of finance ministers
and central bank governors from 20 major economies. The members include
Argentina, Australia, Brazil, Canada, China, France, Germany,
Page | 5

India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russian

Federation, Saudi Arabia, South Africa, Turkey, United Kingdom,
United Statesand the European Union (EU), with Spain participating
as a "permanent guest". The EU is represented by the President of the
European Council and by the European Central Bank.
HISTORY: The G-20, which superseded the G33 (which had itself superseded
the G22), was foreshadowed at the Cologne Summit of the G7 in June 1999,
but was only formally established at the G7 Finance Ministers' meeting on 26
September 1999. The inaugural meeting took place on 1516 December
1999 in Berlin. In 2008, Spain and the Netherlands were included, by French
invitation, in the G-20 Leaders Summit on Financial Markets and the World
Economy.
Organization: The G-20 operates without a permanent secretariat or staff.
The group's chair rotates annually among the members and is selected from
a different regional grouping of countries. The chair is part of a revolving
three-member management group of past, present and future chairs,
referred to as the "Troika". The incumbent chair establishes a temporary
secretariat for the duration of its term, which coordinates the group's work
and organizes its meetings. The role of the Troika is to ensure continuity in
the G-20's work and management across host years.
Criticism: The G-20's transparency and
questioned by critics, who call attention to
the absence of a formal charter and the fact
that the most important G-20 meetings are
closed-door. In 2001, the economist Frances
Stewart proposed an Economic Security
Council within the United Nations as an
alternative to the G-20. The cost and extent
of summit-related security is often a
contentious issue in the hosting country, and
G-20 summits have attracted protesters
from a variety of backgrounds, including
information
activists, nationalists, and
opponents of Fractional Reserve Banking
and crony capitalism.

accountability

have

been

Membership: 20 States
Chairperson: Tony Abbott
Establishing Year: 1999

Page | 6

G-20 Summit, 2013

European Union (EU)

Page | 7

The European Union (EU) is an economic and political union of 28 member

states that are primarily located in Europe. The EU operates through a
system of supranational independent institutions and intergovernmental
negotiated decisions by the member states. Institutions of the EU include the
European Commission, the Council of the European Union, the European
Council, the Court of Justice of the European Union, the European Central
Bank, the Court of Auditors, and the European Parliament. The European
Parliament is elected every five years by EU citizens.

Capital: Brussels
Membership: 28 states

HISTORY: The EU traces its origins from the

European Coal and Steel Community (ECSC)
and the European Economic Community (EEC),
formed by the Inner Six countries in 1951 and
1958, respectively. In the intervening years, the
community and its successors have grown in
size by the accession of new member states
and in power by the addition of policy areas to
its remit. The Maastricht Treaty established the
European Union under its current name in 1993.
The
latest
major
amendment
to
the
constitutional basis of the EU, the Treaty

President: Herman Van

Rompuy
Establishing Year: 1952

Page | 8

Of Lisbon, came into force in 2009.

ACTIVITY: The EU has established a single market across the territory of all
its members. 18 member states have also joined a monetary union known as
the euro zone, which uses the Euro as a single currency. In 2012, the EU had
a combined GDP of 16.073 trillion international dollars, a 20% share of the
global gross domestic product (in terms of purchasing power parity).
According to Credit Suisse Global Wealth Report 2012 (September), the EU
owns the largest net wealth in the world; it is estimated to equal 30% of the
$223 trillion global wealth. Of the top 500 largest corporations measured by
revenue (Fortune Global 500 in 2010), 161 have their headquarters in the
EU.[141] In 2007, unemployment in the EU stood at 7%while investment was
at 21.4% of GDP, inflation at 2.2%, and current account balance at 0.9% of
Page | 9

GDP. In 2012, unemployment in the EU stood, per August 2012; at 11.4%

Madrid is one of the three biggest economic centers of the EU, with Paris and
London.

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) is an agreement signed
by Canada, Mexico, and the United States, creating a trilateral rulesbased trade bloc in North America. It superseded the CanadaUnited States
Free Trade Agreement between the U.S. and Canada .NAFTA has two
supplements: the North American Agreement on Environmental Cooperation
(NAAEC) and the North American Agreement on Labor Cooperation
(NAALC).In terms of combined purchasing
power parity GDP of its members, as of 2007
the trade bloc is the largest in the world and
second largest by nominal GDP comparison.
HISTORY: The agreement came into force on
January 1; 1994.The goal of NAFTA was to
eliminate barriers to trade and investment
between the U.S., Canada and Mexico. The
implementation of NAFTA on January 1, 1994
brought the immediate elimination of tariffs
on more than one-half of Mexico's exports to
the U.S. and more than one-third of U.S.
exports to Mexico.

Administration Centre:
Ottawa, Mexico City,
Washington D.C.
Membership: 3 states
Establishment: 1991

IMPACT: NAFTA's effects, both positive and negative, have been quantified
by several economists, whose findings have been reported in publications
such as the World Bank's Lessons from NAFTA for Latin America and the
Caribbean NAFTA's Impact on North America, and NAFTA Revisited by the
Institute for International Economies.
Page | 10

Asia-Pacific Economic Cooperation (APEC)

Asia-Pacific Economic Cooperation (APEC) is
a forum for 21 Pacific Rim member
economies that seeks to promote free trade
and economic cooperation throughout the
Asia-Pacific region. It was established in
1989
in
response
to
the
growing
interdependence of Asia-Pacific economies
and the advent of regional trade blocs in
Headquarter: Singapore
other parts of the world; to fears that highly
industrialized Japan (a member of G8) would
Membership: 21 states
come to dominate economic activity in the
Establishing Year: 1989
Asia-Pacific region; and to establish new
markets for agricultural products and raw
materials beyond Europe (where demand
had been declining).APEC works to raise
living standards and education levels
through sustainable economic growth and to foster a sense of community
and an appreciation of shared interests among Asia-Pacific countries. APEC
includes newly industrialized economies, although the agenda of free trade
was a sensitive issue for the developing NIEs at the time APEC founded, and
aims to enable ASEAN economies to explore new export market opportunities
for natural resources such as natural gas, as well as to seek regional
economic integration (industrial integration) by means of foreign direct
investment. Members account for approximately 40% of the world's
population, approximately 54% of the world's gross domestic product and
about 44% of world trade.

APECs Three Pillar: To meet the Bogor Goals, APEC carries out work in
three main areas:
Page | 11

1. Trade and Investment Liberalization

2. Business Facilitation
3. Economic and Technical Cooperation

Criticism: APEC has been criticized for promoting free trade agreements
that would trammel national and local laws, which regulate and ensure labor
rights, environmental protection and affordable access to medicine.
According to the organization, it is "the premier forum for facilitating
economic growth, cooperation, trade and investment in the Asia-Pacific
region" established to "further enhance economic growth and prosperity for
Page | 12

the region and to strengthen the Asia-Pacific community". However, whether

it has accomplished anything constructive remains debatable, especially
from the viewpoints of European countries that cannot take part in APEC and
Pacific Island nations that cannot participate but will suffer its consequences.

Cairns Group
Headquarter: Argentina

The Cairns Group is a coalition of 19

Membership: 19 states
agricultural
exporting
countries
which
account for over 25 per cent of the worlds
Establishing Year: 1986
agricultural exports. During the current WTO
Doha Round of negotiations the Group has
continued to push for the liberalization of
trade in agricultural exports, a cause that
unites the Group across language, cultural and geographic boundaries. Made
up of developed and developing countries across five continents, the Group
is committed to achieving free and fair trade in agriculture that provides real
and sustainable benefits for the developing world.
Members of the Group are: Argentina, Australia, Bolivia, Brazil, Canada,
Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand,
Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand and Uruguay.
Cairns Group Vision Statement: The Cairns Group's ambition and broad
objectives for the agriculture negotiations were set out in its Vision
Statement. The Vision Statement outlines the Cairns Group's objectives in
each of the three key reform areas within the framework for agricultural
trade. These include deep cuts to all tariffs and removal of tariff escalation,
the elimination of all trade-distorting domestic subsidies; the elimination of
export subsidies and clear rules to prevent circumvention of export subsidy
commitments.
Page | 13

The Vision Statement reaffirmed the Group's support for the principle of
special and differential treatment for developing countries. Cairns Group
ministers believe that the framework for liberalization must continue to
support the economic development needs, including technical assistance
requirements, of developing and small members.

Other Important Economic Blocs

Page | 14

E s ta b l i s h i n g Y e a r : 1 9 6
AECIn sus tat srree o br clng i istoa h Svt i iene o cgr n ren Y moeteaf er San : yot 1 au G 9 lt e8hA n6 e u a tr ash lto : Ar i st yi a on n N D a et iv o e n l so ( p A m S eE nA tN ( IG) A D )
MInGAC use t rresmle f o r b Ccgn e ioto arsovS t hpei oicrep nrer : am ote1 t fe0i r o aSn snyot taa uCG ltetoe Ah snu eu,en a2tr chas iolot b(: rAGs i tesC yri Cav o)en nr N D a e t vi o e n l os (p A m S e E n A t N ( IG) A D )
M e m b e rs h i p : 6 s ta te s
CMM u ee rremm bb n ee t rrrsSss ehh cii pp re :: te861 0r ss a tatasy tateteG teess ns e, r2 a ol b: s e r v e r
MC ue rrem b n e t rrssS he icp re: te1 5r a s y ta G tee sn e r a l :
CEEG sus u tatarrel f bb nCll ii stso hhSo iienpn cgge rerYY aetee taa ri rroa ::yn 11 GC99 eo78 n15u6 e n r ca il l :( G C C )
CC uu rrerre nn tt SC eh ca rei r mte r an y : G e n e r a l :
CEE cuss tataorren bb onll ii tmss hhS iiecnn cgg C reoYY teee m aa r rma ::y u 11 Gn 99 ei687t n4y15 e or a f l W: e s t A f r i c a n S t a t e s ( E C O W A S )
E s ta b l i s h i n g Y e a r : 1 9
CCME uuc e rreosm tn b no e tm r Cs i hhc aia pCni r o:dm m1 Ea 0 mnc so :utan n otei mt sy i co fU Wn i eo sn t o A f rC i ec an nt r aS lt aA t f e r si c (a E ( C OE MW A C S )
MC ue ms t bo e m rs s h ai p n : d 1 E0 c s o tan teo ms i c U n i o n o f C e n t r a l A f r i c a ( C E M A C )
Page | 15

CM a e r m ib b b e er s a h n i p C : o 2 m 8 m s t ua nt e its y ( C a r ic o m )
CCE uusa trr arr ibeeb nnl bi tts e hSP airen en c g s r Cie yd to e a man r ryt m : G 1uN e 9 i nc 9 iteo 1 rly aa sl( C: M aI ra rw d iciu n o r oLm a )R o c q u e
MECM s uee t rmam r be bb ln iee st rrh sSs i hhne iicgpp r ey:: et 21a 084r y ss: tGt 1aa e9tt ene9 ses1 r a l : I r w i n L a R o c q u e
C u r r e n t S e c r e t a r y G e n e r a l : A . C o n t r e r a s B a s p in e ir o
EME ss ett aar bbc oll ii sss hh u ii rnn gg yy ee aa rr :: 11 99 67 93
CE us tr ar eb nl i ts hS i en c g r e y t e a a r ry : G 1 e 9 n 9 e 4 r a l : H a b i b B e n Y a h i a
MAEC snue t rmda r bee b lna ie stnr h sP iChrn eiogp s m iy:d em1e a 4n ur t sn: : t it1aN 9ty i e c9 so4 l a s M a d u r o
EMC s u e t ram r be b ln ie st rh Ss i hne icg p r ey : et 1 a 5 r y s: Gt 1a e9t ne8 es0 r a l : H a b i b B e n Y a h i a
CACM uur e arr mrr b ee b nn Me tt r aSSs geeh ccih p rr r ee :e tt 1aab 0rr yyU s nGGt aioee t nne n ees rr aa ll :: AP e. tC e o r n M t r u e t r h a a s r iB k aa s p i n e i r o
S o u t h e r n A f r ic a n D e v e lo p m n t C o m m u n it y ( S A D C )
MSC oue rum r te bh n e et r rsS nhe i cAp r fe : r t 5ica r sa y t n a G t Dee sne ev r e a lol : p P m e t e nr t M C u ot h m a mr i k u a n it y ( S A D C )
ME s e t ma b l ei s r h s ih n i gp y: e1 a5 r s : t 1a t9 e 8 s 0
Page | 16