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Regional Trading Blocks.

By Shyam Prasad.

What are regional trading blocks?

Trade block defined as Preferential Trade Agreement between countries, defined to significantly reduce and remove trade barriers within member countries. Trade Block comprises neighbouring, geographically close nations, it is refered to as Regional Trading Block.

Importance
Promotion of cross border trade among the member countries by creating favourable trading environment. The concept of trade blocks is crucial in the context of international trade as regional trade blocks protect the interest of member nations.

Major Trading blocks

NAFTA (North American Free Trade Agreement) EU (European Union) ASEAN (Association of South East Asian Nations) MERCOSUR (Mercado Comun Del Cono Sur) SAARC (South Asian Association for Regional Cooperation)

NAFTA (North American Free Trade Agreement)

NAFTA is an agreement upon free trade among member countries. Founded : 1st January 1994
Members : US, Canada, Mexico Aim : Promote trade among member nations Includes two supplemet agreements : Working

NAAEC ( North American Agreement on Environmental cooperation) NAALC (North American Agreement on Labour cooperation) Eleminates trade barriers in service sectors Reduce high-Mexican tarrif to promote agricultural trade Assist firms to bid govt contracts Fair market value to investors of member nations.

Achievements
Agricultural trade improvement :
Exports : 242.6 % from 1994- 2010 Imports : 283.6% from 1994- 2010

Service Exports from US Canada, Mexico :

$ 25 billion - $62 billion (125%)

US FDI increased to $331billion bt 2006 to Canada and Mexico.

It was established with a $6 trillion economy. By 2004, NAFTA grew to an economy of $12.5 trillion. Current NAFTA GDP : $17.6 trillion (1st)

EU (European Union)
European Union is intergovernmental membership organisation with common market(Single market), single currency. Founded : Established by the treaty of Maastricht on 1st November 1993 Started in1958 by 6 neighboring states as European Coal and Steel Community European Community 1993 European Union.

Members :
Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia France Finland Greece Germany Hungary

Italy Ireland Lativa Lithuania Luxembourg Malta Poland Portugal Romania Slovenia Slovakia Spain Sweden The Netherlands United Kingdom

Goal : Evolving a free trade nations into a union of political, economic and executive connections. Founding principles :
Liberty, democracy, respect for human rights and basic civil liberties, and rule by law.

EU operates through these institutes :

European Comission Council of The European Union The court of justice of The European Union European Central Bank

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GDP (PPP) ranking 1st as of 2006 with $13.06 trillion. GDP growth rate is 3.1% (2006) Inflation rate 1.9 % (2007)

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ASEAN (Association of South East Asean Nations)

Geo-political and economic organisation of ten countries located in South-east Asia. Founded : 8th August, 1967. Initial Members : Malaysia, Indonasia, Philippines, Thailand, Singapore. New members :Brunei, Burma, Cambodia, Laos, Vietnam. Goal : Acceleration of Economic progress, social progress and cultural development among member nations.

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Area coverd

ASEAN summit : To discuss on regional issues, held octnov every year. After the formation, ASEAN countries have had a trade of $1.536 trillion. Increased FDI : FDI has increased two-fold in 2010($75.8 billion) from 2009 ($37.9 billion).
First meeting : 23-24th feb 1976, Bali, Indonasia. Recent meeting : 14-19th Nov, 2011, Bali, Indonasia.

Population : 600 Million (8.8 % world population) GDP : $1.8 trillion

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MERCOSUR (Mercado Comun Del Cono Sur)

Mercosur is an economic and political agreement amont Latin American nations. Members : Argentina, Brazil, Paraguay, Uruguay, Founded : 1991 by the treaty of Asuncion. Goals :Promote free trade and fluid movement of goods, people and currency. Official Languages : Portuguese, Guarani, Spanish.

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Area covered
Population : 270 million. GDP : $ 2.4 trillion (worlds Fourth-largest trading block)

Boosted Immigration into brazil from member nations. Free trade zones are established

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SAARC (South Asian Association for Regional Cooperation)

SAARC is the organisation South Asian nations. Founded : December 1985 by Ziaur Rahman (then Bangladesh President) Goal : Economic , technological, social and cultural development with collective self-reliance. Members : Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Srilanka and Afghanistan. Meetings :
Heads of states : Held annually, Foreign Secretaries : Twice annually.

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Secretariat : Kathmandu , on 16th January 1987. Achievements :

South Asian Free Trade Area
1st Jan 2006, Enforcement of the agreement Immediate effect of agreement, duties down to 20% by 2009.

Meetings
SAARC summits
First : 7-8 dec 1985, Dhaka, Bangladesh Recent : 10- 11th Nov 2011, Addu, Maldives

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Area covered
Population : 1.6 billion (2009) GDP (PPP) : $ 4.3 Trillions (3rd)

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Questions ?

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Thank you!