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.