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Definition and examples

A trade bloc can be defined as a preferential trade agreement (PTA) between a subset of countries, designed to significantly reduce or remove trade barriers within member countries. When a trade bloc comprises neighbouring or geographically close countries, it is referred to as a regional trade (or

integration) agreement.

The two principal characteristics of a trade bloc are that: (1) it implies a reduction or elimination of barriers to trade, and (2) this trade liberalisation is discriminatory, in the sense that it applies only to the member countries of the trade bloc, outside countries being discriminated against in their trade relations with trade bloc members.

Trade blocs can also entail deeper forms of integration, for instance of international competition, investment, labour and capital markets (including movements of factors of production), monetary policy, etc.

The main trade blocs in the world are:

(1) in Europe, the European Union (EU), the European Free Trade
Agreement (EFTA), the European Agreements, and the European Economic Area (EEA); (2) with the United States, the North American Free Trade Agreement (NAFTA), the Canada-US Free Trade Agreement (CUSTA), and the US Israel Free Trade Agreement; (3) in Latin America, the Common Market of the South (MERCOSUR), the Central American Common Market (CACM), the Andean Pact, the Latin American Integration Association (LAIA), and the Caribbean Community andCommon Market (CARICOM); in Sub-Saharan Africa, Communaut Economique de lAfrique Occidentale (CEAO)/Union Economique et Montaire de lAfrique Occidentale (UEMOA), Union Douanire et Economique dAfrique Centrale (UDEAC), the Common Market of Eastern and Southern Africa (COMESA)/Preferential Trade Area for Eastern and Southern African States (PTA), the Southern African Customs Union (SACU); and (4) in Asia, the Association of Southeast Nations (ASEAN) and the

The causes of trade bloc formation

Several reasons explain the recent emergence of trade blocs. The so-called old regionalism was motivated by the desire to pursue in developing countries import substitution development at a regional level, to insulate a region from the world economy and to stabilise and foster the economy at a regional level. In other words, the fewer the number of participants to trade negotiations, the larger the number of issues on which it is possible to reach an agreement. Another claimed advantage of PTAs is that they may help ensuring the credibility of the



is a family of democratic European countries. Committed to working together for peace and prosperity. Its historical roots lie in the second world war. Idea of European integration was conceived to prevent such killing and destruction from ever happening again.


19 September 1950: European Payments Union (EPU) 18 April 1951: European Coal and Steel Community established 25 March 1957: Treaty of Rome 29 December 1958: Agreement European Monetary


parliament(elected by peoples of member states) Council of European union(representing the governments of member states) European commission(driving force and the executive body) Court of justice Court of auditors

Austria members Belgium

Bulgaria Cyprus Czech Republic Denmark Estonia Latvia Luxembourg

Finland France Germany Greece Hungary Ireland Italy Lithuania Malta

Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom Netherlands


introduction January 6, 2004 at the 12th Reached on

SAARC summit in Islamabad, Pakistan. Free trade area of 1.6 billion people in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Reduce customs duties of all traded goods to zero by the year 2016. Came into force on January 1, 2006


Overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems. Negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews. Recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favors. Inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.