Regional Trade Blocks

REGIONAL TRADE BLOCKS
REGIONAL INTEGRATION
Free Trade Area
 No Barriers To Trade of Goods and Services
Among Member Countries
 No Discrimination of Quota, Tariff, Subsidies
Among Member Countries
 Member Countries Can Decide Own Policies for
Non-member Countries
 Variable Tariffs By Each Member Country On
Same Products Imported From Non-member
Countries
Customs Union
 Step Towards Economic and Political Integration
 No Barriers To Trade of Goods and Services Among

Member Countries
 Common External Trade Policy Among Member
Countries
 Administrative Mechanism To Oversee Trade
Relations With Non-members
Common Market
 Similar To Customs Union
 No Barriers To Trade of Goods and Services
Among Common and Same External Trade
Policy
 Free Movement of Factors Like Labour and
Capital
 No Restrictions on Immigration and Capital
Movements
Economic Unions
 Closer Economic Integration and Cooperation Than
Common Market
 No Barriers To Trade of Goods and Services Among
Common and Same External Trade Policy and Free
Movement of Factors Like Labour and Capital
 Common Currency, Hormonisation of Tax Rates and
Common Fiscal & Monetary Policy. A Step Towards
Political Union
NAFTA
 January 1994
 USA, Canada, Mexico
 Worlds Largest Free Trade Area
 Increased Trade and Investments
 Tariff and Non-tariff Elimination
 Will Include South American Countries

NAFTA
 Pact to Eliminate Barriers for 10,000
Products for Trade Between Member
Countries
 Pact to Benefit Over 380 million Consumers
 Implementation Over a Period of 15 Years
NAFTA
Goals
 Strengthen Bond of Friendship & Cooperation
 Catalyst for International Ccoperation
 Create, Expand and Secure Future Markets
 Establish Fair Rule of Trade
 Establish Predictable Framework for Business

Planning
NAFTA
Main Characteristics & Benefits
 Increased Jobs and Demand for Local Products
 Expand Trade Liberalisation in the Region
 Elimination of Tariffs and Adjustment Period of

15 Years for Some Products
 IPR – Higher Levels of Protection
 GATT Principle of Non-discrimination

NAFTA
Main Characteristics & Benefits
 US gained by Export of Agriculture Products
 Mexico Imported Worth $8.5 b in 2004
 Canada Imported Worth $9.6 b and is Second

Largest Market for US Agriculture Products
 Incredible Flow of Trade and Investments in
Member Countries During First 10 Years
NAFTA
India and NAFTA Countries
 USA – Largest Business Partner of India
 India – Preferred Destination for Auto Parts
 Canada – Imports Electronics and Software
 Mexico – Focused Destination, Fastest Growing
Country
 Proximity to Latin America and Member of
NAFTA
NAFTA
NAFTA & WTO
 Regionalisation May Harm WTO
 Regionalisation Has Helped Mexico
 There are No Indications That Regionalisation is

Harmful For Economic Growth
 NAFTA is Complementary To WTO
EUROPEAN UNION
Power Center in Global Economy
 Second Largest Economy
 26.6% Share to Global GDP, US Share 32.5%,
Japan Share 12.2%
 Block of 25 Countries, Population over 450 m
 31.1% Share to Merchandise Global Exports, US
Share 11.1%
 $3300 b Merchandise and $712 b Services in
2004
EUROPEAN UNION
Power Center in Global Economy
 Major Player in Capital Markets – Lending and
Investments
 Most Important Source of FDI in the World
 48 Out of 100 Largest Assets Are In EU
 70% Global M&A Are of EU MNCs
 Major Banking Activities in the East

EUROPEAN UNION
Vision
 The Most Competitive and Knowledge Based
Economy In The World By 2010Capable of
Sustainable Economic Growth, With More and
Better Jobs and Greater Social Cohesion
Lisbon Strategy 2002
EUROPEAN UNION
Background
 Headquarters in Brussels
 Established on Nov 1, 1993
 Started As European Coal & Steel Community in 1951
 Became European Community in 1967
 12 Members Signed Treaty of EU
 In 2004 – 25 Member Countries
EUROPEAN UNION
Objectives
Promote and Expand Cooperation
 Economics
 Trade
 Social Issues
 Foreign Policy
 Security
 Defence
 Judicial Matters
EUROPEAN UNION
Objectives
 Common Commercial Policy
 Reducing Economic Differences Between

Richer and Poorer Members
 Stabilising Currencies of Its Members
EUROPEAN UNION
Beliefs
 Economic Motives Rests on Larger Markets
Leads To More Competition
 Greater Productivity & Higher Standards of
Living
 Economic Strength Is Basis For Political and
Military Power
 Reduction of Conflict Between The Nations
EUROPEAN UNION
Single Market and Common Commercial Policy
 Competition Policy
Prevent Price Fixing, Collusion and Abuse of Monopoly

 Free Movement of Goods
Customs Union, Common Tariff For Imports From Non-
members
 Free Movements of Persons
Work and Live in Member Countries
EUROPEAN UNION
Single Market and Common Commercial Policy
 Services
Right to Provide Services In Member Countries

 Capital
No Restrictions on Movements of Capital
 Taxation
VAT Not Less Than 15%
EUROPEAN UNION
Trade Policy
 Progressive Liberalisation of Trade
Leading to Gradual Opening of Markets

 Free Access to External Markets
 Fair Competition
 Respect of WTO Commitments
EUROPEAN UNION
The Lisbon Agenda of EU – 2000
 Sustain Economic Growth By Taking Advantage of
Common Market Opportunities & Reduction in
Barriers
 Promote Entrepreneurship in Energy, Transport,
Postal, Financial Services By Reducing State Aid
 Reduction in Administrative & Tax Burdens
 Education and Pension System Reforms

EUROPEAN UNION
India and EU
 India recognised EU in 1962
 EU is Largest Trading Partner and Source of FDI
 India is EU’s 17th Largest Supplier and 20th

Largest Export Destination, in Value Terms
 High Import Duty in India
 High Standards, a Barrier for Indian Exporters

EUROPEAN UNION
India and EU – Bilateral Agreements
 Agreement on Sugarcane
Exports to EU, at Guaranteed Price

 Administrative Agreement on Textile Trade
Management of Quotas and Reduction in Tariff

 Cooperation Agreement
Agreement on Trade, Economic Cooperation,

Environment, Agriculture, Tourism, IPR
EUROPEAN UNION
India and EU – Bilateral Agreements
 Science and Technology Agreement
Covers Health, Agriculture and Natural Resources

Allows Access to Indian Researchers to EU’s
Programme of Research and Technologigy
Development
 Customs Cooperation Agreement
Simplify Customs Procedures as per Intl. Standards

ASEAN
Formation
 August 8, 1967, Signed at Bangkok
 Signatories
Thailand
Indonesia
Malaysia
Singapore
Philippines
ASEAN
Objectives
 Accelerate Economic Growth, Social Progress
and Cultural Development
 Spirit of Equality and Partnership for Prosperity
in The Region
 Promote Peace and Stability, Respect to Other
Nations as per Charter of UN
ASEAN
Declaration
 Collective Will of the Nations to Bind
Themselves Together in Friendship and
Cooperation and Through Joint Efforts and
Sacrifices. Secure for Their People and For
Posterity the Blessings of Peace, Freedom and
Prosperity
ASEAN
Fundamental Principles
The Treaty of Amity and Cooperation in SE Asia
Signed on February 24, 1976
 Mutual Respect for the Independence, Sovereignty,
Equality, Territorial Integrity and National Identity of All
Nations
 The Right of Every State to Lead Its National Existence
Free From External Interference, Subversion or Coercion
ASEAN
Fundamental Principles
 Non-interference in The Internal Affairs of Other
Member Nations
 Peaceful Settlements of Difference or Disputes
 Renunciation of The Use of Threats or Force
 Effective Cooperation Between Themselves

ASEAN
Agreements With India
 Signed on October 8, 2003
 Agreement to Create Indo ASEAN Free Trade

Area By 2011
 Agreement to Counter Terrorism
 India Becoming Signatory To ASEAN Treaty of
Amity and Cooperation
ASEAN
Trade Opportunities in ASEAN Countries
 Tourism
 Open Sky Policy
 Indian Film Industry
 BPO
 Other Areas Like Auto Parts, Natural Resources

ASEAN
Trade Opportunities in ASEAN Countries
 Tourism
 Open Sky Policy
 Indian Film Industry
 BPO
 Other Areas Like Auto Parts, Natural Resources

Regional Trade Blocks

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Regional Trade Blocks

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REGIONAL TRADE BLOCKS

 No Barriers To Trade of Goods and Services Among

 USA, Canada, Mexico

 Worlds Largest Free Trade Area

 Increased Trade and Investments

 Tariff and Non-tariff Elimination

 Will Include South American Countries

 Catalyst for International Ccoperation

 Create, Expand and Secure Future Markets

 Establish Fair Rule of Trade

 Establish Predictable Framework for Business

 Expand Trade Liberalisation in the Region

 Elimination of Tariffs and Adjustment Period of

 GATT Principle of Non-discrimination

 Mexico Imported Worth $8.5 b in 2004

 Canada Imported Worth $9.6 b and is Second

 Regionalisation Has Helped Mexico

 There are No Indications That Regionalisation is

 48 Out of 100 Largest Assets Are In EU

 70% Global M&A Are of EU MNCs

 Major Banking Activities in the East

 Reducing Economic Differences Between

Prevent Price Fixing, Collusion and Abuse of Monopoly

Right to Provide Services In Member Countries

Leading to Gradual Opening of Markets

 Education and Pension System Reforms

 EU is Largest Trading Partner and Source of FDI

 India is EU’s 17th Largest Supplier and 20th

 High Standards, a Barrier for Indian Exporters

Exports to EU, at Guaranteed Price

Management of Quotas and Reduction in Tariff

Agreement on Trade, Economic Cooperation,

Covers Health, Agriculture and Natural Resources

Simplify Customs Procedures as per Intl. Standards

 Renunciation of The Use of Threats or Force

 Effective Cooperation Between Themselves

 Agreement to Create Indo ASEAN Free Trade

 Open Sky Policy

 Indian Film Industry

 Other Areas Like Auto Parts, Natural Resources

 Open Sky Policy

 Indian Film Industry

 Other Areas Like Auto Parts, Natural Resources

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