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Trade Block

1) A trade bloc is a group of countries that remove trade barriers among themselves and create common trade policies while imposing barriers on non-member countries. 2) The main types of trade blocs are free trade areas, customs unions, common markets, and economic unions which have increasing levels of economic integration. 3) Major trade blocs discussed include NAFTA, EU, ASEAN, SAARC, OPEC, CACM, and ALADI. Each has different member countries and levels of economic cooperation.

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122 views

Trade Block

1) A trade bloc is a group of countries that remove trade barriers among themselves and create common trade policies while imposing barriers on non-member countries. 2) The main types of trade blocs are free trade areas, customs unions, common markets, and economic unions which have increasing levels of economic integration. 3) Major trade blocs discussed include NAFTA, EU, ASEAN, SAARC, OPEC, CACM, and ALADI. Each has different member countries and levels of economic cooperation.

Uploaded by

sajaleco
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Different Trade Blocs

What is a Trade Bloc?

A group of countries

→ Which are geographically close to each other


→ Have similar trade policies
→ With their mutual co-operation allow free flow of goods

Trade blocs have liberal rules for the member countries and
separate set of rules for the non-member countries

They facilitate trade to member countries of the group but


create barriers and block the trade of member countries

Slide 1 / 14
Types of Trade Blocs

Trade
Blocs

Free Trade Customs Common Economic


Area Union Market Union

NAFTA SAARC CACM OPEC EU ALADI

Slide 2 / 14
Features of Trade Blocs

 Voluntary in Character

 Mutual Negotiations

 Regional in Character

 Divisions based on political considerations

 Existence based on usefulness

Slide 3 / 14
Objectives of Trade Blocs

→ Reduction of trade barriers among the member countries


→ Maintaining better relations
→ Imposing barriers on non member countries
→ Promoting free transfer of labour, capital and other factors
→ Creating common currency and Central Bank
→ Collective Bargaining
→ Assisting member countries
→ Enhancing welfare of consumers
→ Generating competition
→ Promoting Higher Employment
Slide 4 / 14
Positive Effects of Trade Blocs

→ Economic Integration
→ Co-operative Spirit
→ Expansion of Markets
→ Growth and Development of the region
→ Uniform policies
→ Increase in trade
→ Product and Market Development
→ Benefits to consumers of member countries
→ Free transfer of resources / factors

Slide 5 / 14
Negative Effects of Trade Blocs
Negative effects are for the non-member countries

→ Common External Barriers


→ Absence of Collective Bargaining
→ Affects Competition
→ Affects global and international trade
→ High Tariffs
→ Import Restrictions
→ Loss of Political Sovereignty

Slide 6 / 14
Trade Blocs & Intra-regional trade
Intra-regional trade means trade carried on within one trading blocs

Trade Blocs have contributed the following favorable factors for the growth of Intra-
regional Trade

 Removal of trade barriers


 Transfer of labour and capital
 Uniformity in political and economic policies
 Close relations between members
 Transport and other infrastructural facilities
 Common external barriers on non members
 Common economic policy

Slide 7 / 14
NAFTA
NAFTA stands for North American Free Trade Agreement

An agreement signed by Canada, Mexico, and the United


States

It came into force on January 1, 1994.


It is the most powerful trade bloc of the world
Type: Free Trade Area
NAFTA has two supplements:

 North American Agreement on Environmental Cooperation (NAAEC)


 North American Agreement on Labour Cooperation (NAALC)
Intra-regional trade between the member countries is US $ 767
Billion

Slide 8 / 14
OPEC
OPEC stands for Organization of the Petroleum Exporting Countries.

It was established on 14th September, 1960

An oil cartel whose mission is to coordinate the policies


of the oil-producing countries.

It is headquartered in Vienna, Austria


Member Countries:
Type: Common Market
1. Iraq 8. Qatar
2. Kuwait 9. Indonesia
3. Iran 10.Algeria
4. Saudi Arabia 11.Nigeria
5. Venezuela 12.Ecuador
6. Libya 13.Angola
7. United Arab 14.Gabon.
Emirates
Slide 9 / 14
ASEAN
ASEAN stands for Association of Southeast Asian Nations.

It was formed on 8th August 1967.

It is a political and economic organisation of ten countries


located in Southeast Asia

Members: It’s aims include:


Type: Economic Union
1. Indonesia → Accelerating economic growth
2. Malaysia
3. Philippines → Social progress
4. Singapore → Cultural development among its members
5. Thailand
6. Brunei → Protection of regional peace and stability
7. Myanmar
8. Cambodia → Opportunities for member countries to discuss
9. Laos differences peacefully
10. Vietnam
Slide 10 / 14
SAARC
SAARC stands for South Asian Association for Regional Cooperation

Headquartered in Kathmandu, Nepal

It was established on 8th December 1985

Members: The SAARC policies aim to promote:


Type: Free Trade Area
1. Afghanistan  Welfare economics
2. Bangladesh
3. Bhutan  Collective self-reliance among the countries of South Asia
4. India  Accelerate socio-cultural development in the region
5. Maldives
6. Nepal  Develop good external relations
7. Pakistan
8. Sri Lanka
Slide 11 / 14
EU
EU stands for European Union.

Came into existence on 1st January 1958

It is headquartered at Brussels, Belgium


It has 28 member countries:

1. United Kingdom Type: Economic Union


2. Belgium
3. Finland
4. France In January 1999, a common currency € (Euro)
5. Germany was introduced
6. Netherlands
EU offers financial aid to the developing countries
7. Norway
8. Poland
It is a strong trade bloc politically, industrially
9. Portugal
10. Greece and 18 more
and economically

Slide 12 / 14
CACM
CACM stands for Central American Common Market.

Type: Customs Union

It was established on 15th December 1960.

Headquartered in Guatemala City.

It consists of 5 Central American member countries:

1. Guatemala
2. Honduras
3. El Salvador
4. Nicaragua
5. Costa Rica

Slide 13 / 14
ALADI
ALADI is a Spanish abbreviation for Latin American
Integration Association.
It was established on 12 August 1980
It replaced Latin American Free Trade Agreement
(LAFTA)

It has 13 member countries:


Type: Economic Union

1. Argentina 8. Mexico ALADI aims at


2. Bolivia 9. Paraguay
3. Brazil 10.Ecuador  Harmonious and balanced socio-economic
4. Chile 11.Peru development
5. Colombia 12.Uruguay  Progressive establishment of a Latin-
6. Cuba 13.Venezuela American Common Market.
7. Panama

Slide 14 / 14

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