Trade Blocs

Members:-
RENU AYYAPPAN
RENU NAIR
 Regional Trade Blocs
• Regional trade blocs are intergovernmental
associations that manage and promote trade
activities for specific regions of the world.
 Regional Economic Integration : Important mode of
economic development
 Level of Economic Integration
 Free Trade Area (FTA) : Goods and Services are freely traded
among member countries, example : NAFTA, AFTA, APEC
 Customs Union (CU) : FTA + Common trade policy with respect
to nonmembers
 Common Market (CM) : CU + Free flow of factors of production
(Labor, Capitol and Technology) between member countries
 Economic Union : CM + Integration of economic policies.
Harmonize monetary policies, Taxation and Government
spending
 Political Union : Economic union + Political Unification
 Economic Union • Regional Economic Trading Blocs

Common Market  Free Trade Area (FTA)

Economic Union  Customs Union (CU)
Customs Union
 Common Markets
Free trade area  Economic Union
 Political Union
Free trade
among members

Common External Trade Policy

Factor Mobility

Harmonization of Economic Policies

 Major Trade Blocs
 EU (European Union )
 NAFTA (North American Free Trade Agreement)
 MERCOSUR (Mercado Comun del Cono Sur, also known as
Southern Common Markets (SCCM)
 ASEAN (Association of Southeast Asian Nations)
 SAARC (south Asian association for regional cooperation)
 OPEC (The Organization of the Petroleum Exporting
Countries)
 SAFTA (Singapore –American free trade agreement)
 LAFTA (Latin American Free Trade Association)
 European Union
 It 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.
Member states of the EU:
– Austria, Belgium, Bulgaria, Cyprus,
Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland
, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania,
Slovakia, Slovenia, Spain, Sweden, United
Kingdom
European Union
Objectives:-
 Setting up a common market
 Continuous & balanced expansion
 Closer relations between the member states.
 ACTIVITIES OF EU
 Elimination of custom duties, quantitative restrictions
with regard to export & imports.
 Establishment of a common custom tariff &
commercial policy.
 Abolition of all obstacles for movement of persons,
services & capital.
 Application of programmes in order to coordinate the
economic policies.
 ASEAN
 Established in 1992
 Total six members- Singapore, Brunei, Malaysia,
Philippines, Thailand & Indonesia.
 To establish a common effective preferential tariffs
(CEPT) plan.
 The CEPT allows for tariffs cut ranging from 0.50% to
20.00% beginning with 15 products.
 In 1994, ASEAN countries formed AFTA in order to
develop inter ASEAN trade.
Objectives of AFTA
 To encourage inflow of foreign investment into
this region.
 To establish free trade area in the member
countries.
 To reduce tariff of the products produced in
ASEAN countries (40% value addition in the
ASEAN countries to the product value is treated
as manufactured in ASEAN countries).
 NAFTA
 Initially bilateral trade between Canada & U.S.
 NAFTA went into effect in 1994 after the joining
of Mexico.
 U.S.- Canada trade is the largest bilateral trade
in the world.
 The U.S. 1st Mexico’s & Canada largest trading
partner.
 NAFTA is a powerful trading bloc with a
combined population and GNP greater than 15
member EU.
 Provisions of NAFTA
 Duty-free market access.
 Trade rules- safeguard, subsidies, countervailing
& antidumping duties, health & safety standards.
 Rules on trade in services & investment
 Protection of intellectual property.
 Dispute settlement mechanism.
 The Organization of the Petroleum Exporting
Countries (OPEC)
 History:
 The Organization of the Petroleum Exporting
Countries (OPEC) is a permanent,
intergovernmental Organization, created at the
Baghdad Conference on September 10–14,
1960.
 Functions:
 The OPEC MCs coordinate their oil production
policies in order to help stabilize the oil market
and to help oil producers achieve a reasonable
rate of return on their investments. This policy
is also designed to ensure that oil consumers
continue to receive stable supplies of oil.
OPEC MEMBER COUNTRIES

Austria, Australia, Belgium, Canada, Czech Republic,

Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Japan, Luxembourg, Mexico,
New Zealand, Netherlands, Norway, Poland, Portugal,
Republic of Korea, Slovak Republic, Sweden,
Switzerland, Turkey, United Kingdom, United States of
America
Founder Member: Iran, Iraq, Kuwait, Saudi Arabia, and
Venezuela
Full member: Qatar, Libya, Indonesia, United Arab
Emirates, Algeria and Nigeria
Associate member: Gabon
 OPEC FUND:
 The OPEC Fund for International Development is a
multilateral development finance institution. It was
established in January 1976, by the member
countries of the Organization of the Petroleum
Exporting Countries.
OPEC’s mission is to coordinate & unify the petroleum
policies of Member Countries &
ensure the stabilization of oil prices in order to secure
an efficient, economic & regular supply of petroleum to
consumers, a steady income to producers & a fair return
on capital to those investing in the petroleum industry.
OPEC Secretariat
 The Secretariat carries out the executive
functions of the Organization in accordance with
the provisions of the OPEC Statute and under
the direction of the Board of Governors
 The Organization of the Petroleum Exporting
Countries (OPEC)
 It’s a permanent organization established in 1960 at the
Baghdad conference by Iran Iraq, Kuwait, Saudi Arabia,
and Venezuela.
 It was later joined 8 other members.
 Its head quarter is in Vienna.
 Its objective is to coordinate and unify petroleum policies
amongst the member countries
 To secure fair and stable prices for petroleum producers.
 Proper price and regular supply of petroleum for
consuming nations.
 MERCOSUR
 Established in 1991 by Brazil, Argentina, Paraguay,
Uruguay.
 These four members generate 70% GNP of south
America.
 By 1996, MERCOSUR had abolished tariffs on goods
accounting for 90% of the trade between its members
countries, with remaining tariffs to be abolished by 2000.
 MERCOSUR & EU Signed a cooperation agreement to
pave the way for a free trade accord in 2001.
 LAFTA (Latin American Free Trade
Association)
• The Latin American Free Trade Association,
LAFTA, (later transformed into the Latin American
Integration Association or Asociación
Latinoamericana de Integración ALADI) was
created in 1960 in the Treaty of Montevideo
• Members -Argentina, Brazil, Chile, Mexico,
Paraguay, Peru, and Uruguay.
 Objectives
 To build up a common market for South American countries
and thereby to bring about a gradual reduction in trade barriers
among member countries.
 LAFTA as a trade bloc wants to stimulate intra-Latin American
trade and also to increase Latin American’s declining share in
world trade.
 The goal of the LAFTA is the creation of a free trade zone in
Latin America. It should foster mutual regional trade among the
member states, as well as with the U.S. and the European
Union.
 The ALADI promotes the creation of an area of
economic preferences in the region, aiming at a
Latin American common market, through three
mechanisms:
Regional tariff preference granted to products
originating in the member countries, based on the
tariffs in force for third countries
Regional scope agreement, among member countries
Partial scope agreements, between two or more
countries of the area
SAARC (SOUTH ASIAN ASSOCIATION FOR REGIONAL
COOPERATION)
SAARC
 Established in August 1983.
 Members-India, Bangladesh, Bhutan, Pakistan,
Srilanka ,The Maldives & Afghanistan
 Objectives of SAARC
 To improve the quality of life & welfare of the people
of the member countries.
 To develop the region economically, socially &
culturally
 To provide the opportunity to the people of the region
to live in dignity & to exploit their potentialities.
 To enhance the mutual assistance among member
countries in the areas of economic, social, cultural,
scientific & technical field.
 To enhance cooperation to other trade blocs.
SAPTA
 The council of ministers have signed the SAARC
preferential trading arrangement agreement on
April 11, 1993.
Objectives of SAPTA
 To gradually liberalize the trade among members of
SAARC.
 To eliminate trade barriers among SAARC countries
& reduce or eliminate tariffs.
 To promote and sustain mutual trade & economic
cooperation among member countries.
 AREAS OF COOPERATION
 Agriculture and Rural Development;
 Health and Population Activities;
 Women, Youth and Children;
 Environment and Forestry;
 Science and Technology and Meteorology;
 Human Resources Development; and
 Transport.
 Recently, high level Working Groups have also been established
to strengthen cooperation in the areas of Information and
Communications Technology, Biotechnology, Intellectual
Property Rights, Tourism, and Energy.
 Fourteenth SAARC Summit
 The President of the Islamic Republic of Afghanistan, His Excellency Mr.
Hamid Karzai; the Chief Adviser of the Government of the People’s
Republic of Bangladesh, His Excellency Dr. Fakhruddin Ahmed; the Prime
Minister of the Kingdom of Bhutan, His Excellency Lyonpo Khandu
Wangchuk; the Prime Minister of the Republic of India, His Excellency Dr.
Manmohan Singh; the President of the Republic of Maldives, His
Excellency Mr. Maumoon Abdul Gayoom; the Prime Minister of Nepal, Rt.
Hon’ble Mr. Girija Prasad Koirala; the Prime Minister of the Islamic
Republic of Pakistan, His Excellency Mr. Shaukat Aziz; and the President
of the Democratic Socialist Republic of Sri Lanka, His Excellency Mr.
Mahinda Rajapaksa, met at the Fourteenth Summit meeting of the South
Asian Association for Regional Cooperation (SAARC) held in New Delhi,
India on April 3-4, 2007.
 The Heads of State or Government welcomed
the entry of the Islamic Republic of Afghanistan
into SAARC. This was a historic moment as
Afghanistan assumed its rightful place as a
valued member of the SAARC fraternity
 The SAARC Secretariat
 The SAARC Secretariat was established in Kathmandu on 16
January 1987. Its role is to coordinate and monitor the
implementation of SAARC activities, service the meetings of the
Association and serve as the channel of communication between
SAARC and other international organizations. The Secretariat has
also been increasingly utilized as the venue for SAARC meetings.
 The Secretariat comprises the Secretary General, seven Directors
and the General Services Staff.
 Established Centers
1. SAARC Agricultural Information Centre (SAIC), Dhaka
2. SAARC Meteorological Research Centre (SMRC), Dhaka
3. SAARC Tuberculosis Centre (STC), Kathmandu
4. SAARC Documentation Centre (SDC), New Delhi
5. SAARC Human Resources Development Centre (SHRDC),
Islamabad
6. SAARC Coastal Zone Management Centre, Maldives
7. SAARC Information Centre, Nepal
8. SAARC Energy Centre, Pakistan
9. SAARC Disaster Management Centre, India 
 IMPORTANCE OF INTRA-REGIONAL
TRADE
 One of the most important ways through which
developing countries an accelerate their
economic growth through enhancing intra-
regional co-operation.
 IRT must become a integral part of the growth
strategy of SAARC countries if they are to
develop their full potential.
CONCLUSION
Becoming global is today's necessity for every
industry whether already established or
emerging. To stand on International front the
foremost need is to prove the caliber at regional
and domestic front.