Purposes of Regional Trade Blocks

Introduction In the midst of post-modernity and globalization trading of goods, services, and labor force became significant in the instability of economy of any country. The role of merchandizing products coming from any global points ostensibly booster economic growth, not only that, but also social and political growth. Towards the second millennium, global market fostered highly- standardized requirement for competition in economic and business sector. Such movement pushes any organizations to further develop marketing and business strategies in which it will adoptively stationed itself in the recent global competitive circle. Every society is composed of various domains and each domain occupies certain responsibility and location in which helps society in general to develop and progress. The economy as one of the domains dominates the role on how business, financial, and marketing growth of society lead to prosperity and progress, while politics governs the operations and processes of governing the society towards order, peace, and harmony. In this level, this paper would like to present issues concerning the role of economy on bolstering the growth of society. The evolution of society is tantamount to the evolution of its paradigms or domains of interaction and identification. Such Darwinian evolution concurs us to understand the inevitability of change which relatively synonymous with development. The progress and evolution on economic systems and modes of business transactions changes according to the needs of the present times. Such modifications and rapid progression on economic system structures and exchange of services, goods and manpower aligned to societys leeway on changes and prosperity in every domain.

Economic Systems and Business Lifestyles The world trade systems and business mode of product exchange is dynamic and evolving. The barter trade, mercantile, laissez faire, and free trade are modes of business trades which were the product of mans ingenuity to come up with more conducive and progressive mode of trade. Moreover, economic systems evolve according to the status of the times like communism, utilitarian and democratic systems were provided hoping to solve the unending search of man for optimum good and benefit to have an egalitarian and prosperous society.

The world today as it traverses towards a more complicated and globalized, business lifestyles and economic systems develop accordingly. The search for better alternatives on modes of business and product trades invoke significant changes not only to economic reforms and structures but brought relevance to politics and culture. Various countries and independent states are positioned in different intersecting locations. The geographical connection between nations and states are in strategic position for business exchange and trading of products. However, such business transactions follow certain rules and regulations defined by existing groups authorized to identify and formulate rules and regulations.

Regional Trade Blocks The regional trade blocks are countries which are tied to trade products with neighboring countries geographically strategic and near. Such regional trade occurred to provide quality products yet are low cost to countries which are interested in exchange with products with the same incentive given. The regional trade blocks are regulated according to the guidelines stipulated in the agreement. The regional trade agreement defined as unions of countries formed with the objective of reducing to trade between countries. Recently, the definition of RTA was modified not only restricted to what the traditional definition dictated, which means unions of countries not necessarily belong to the same geographical regions. These blocks exchange products and goods in preferential trade agreement. This means member countries impose lower trade barriers on goods produced within the groupings, with flexibility for each member country on the extent of the reduction. In this agreement free trade area become the special case in which member countries completely abolish trade barriers for good origination within the member countries. Moreover other categories of RTA are common market which unions attempt to harmonize some institutional arrangements and commercial and financial laws and regulations among themselves and economic union, countries which implement common economic policies and regulations and adopt a single currency like European Union.

Importance of Regional Trade Blocks The relevance of creating regional trade blocks is important in the economic system and business growth of a country. Moreover, more than such is its effect on other societal domains like politics and culture. Nevertheless, its intentions are not only limited for economic change or bolstering business income or profit rather some political and social interests are also being advanced. Such reality within the RTA is implicit. However, mainstream economists further imposed such driven interests with those developed countries which belong to RTA.

Moreover, economists and other scholars would like to believe that regional trade blocks can be a stepping block for free trade, but argued not necessarily circumscribed to abolish multilateral trade systems. The bilateral free trade agreement between two close neighbors brings about larger production and trade gains than between distant countries because the former entails a larger mutual tariff reduction. Let us identify specific purposes of regional trade blocks according to synthesized facts coming from available sources and literatures.

Formation of trade blocks may increase or reduce welfare depending on whether trade creation or trade diversion dominates.

The concept of trade creation came from the Viner in his seminal contribution about economic analysis and business production in which due to the formation of the regional agreement, regional trade blocks switch from inefficient domestic producers and import more from efficient producers from other members of regional trade. Such case, efficiency gains arise from both production efficiency and consumption efficiency. Trade diversion, on one hand, means members switch imports from low-cost production in the rest of the world and import more from higher-cost producers in the partner countries. This only means that trade creation and trade diversion have opposite welfare implications and the net effect will depend upon which of these two effects dominate. Such analysis, however, will lead us to realize something significant in the process of being included in such trade blocs that enhances and helps countries with different geographical location in its economic growth and sustenance. Attracting Foreign Investors

Such an economic strategy attracts investors to spend their resources for business and product exchange. The regional trade blocks with its positive effects based on agreement identified to be attractive to foreign investors. Since, in regional trade blocks wherein neighboring countries which are geographically near and connected can easily exchange lowcost yet quality products. This incurs an advantage with investors on the level of reducing the cost-production. Moreover, the attraction is not only limited to the economic significance or business relevance but on the idea of further enhance the diplomacy and connection between countries and established business networks.

Accelerating Local Reforms The economic factor of regional trade blocks is obviously positive. One of which positive effect is seen on the level of local reforms pursued by local authorities. It is quite obvious that in union with other countries economic and cultural promotion are being advanced in order to further acquire support from members of the union or bloc. The regional trade bloc does not only participate in product exchange of goods, services, and human labor but also creates programs which are

beneficial to its member countries and also to promote welfare. In this sense, it helps to accelerate intended reforms especially of those member countries of the bloc which needs the support of other developed member countries. Furthermore, such socio-economic platform of trade blocs would also advance its interest on the process towards achieving an open market economy, wherein all members are allowed to exchange trade with low tariffs.

Integration of Global Structure and Dynamics Regional blocs served as an intermediary steps towards a faster integration of global dynamics and thus the creation and expansion of global structures. To respond to the conditionalities of the global institutions the need of integration with the economic landscape and systems would paves the way towards integration of global structure and dynamics. This articulation explains the fact that the creation of such trade blocs supports the trend of globalization and eventually helps to integrate and set global structures and dynamics. Regional trade blocs or agreement was not attractive to some developed and powerful countries if and when United States did not step out on the multilateral system and entered into regional trade agreement. Such movement of the United States attracts other powerful countries to engaged itself from such trade system and eventually benefited much on such regulatory trade.

Facilitating trade and creating free trade zones This purpose points to regional trade blocs initiatives. With its trade-oriented initiatives aiming at facilitating trade and creating free trade zones is found on the very objective of the RTA in which the promotion of free trade area or agreement. The free trade zones are being promoted as part of the RTAs programs in which only accessible to the member of the unions. However, such program is problematic to some member countries in which are not yet developed. Such advancement of the program pushes by some of the powerful members in order to increase its incentives and benefits. On the other hand, RTAs facilitates trade to countries that interested to be part of the union.

Contribute in enhancing partnership and democratic practices Partnership and democratic practices became the system of globalization. The need of further partnership is significant and imperative to countries which desire to establish networks and business trade. Now, the ability of negotiation is imperative and vital in establishing deals with other countries. Democratic process, on the other hand, is vital in ensuring transparency, accountability and the participation of all in the process. The democratic system entails a free movement and exchange of goods or products without rigid rules and regulations to follow. In democratic process open trade and negotiation are desirable options and approaches in which a country may be able to acquire partnership with other countries within the union.

The emphasis on democratic process is not only limited to economy but also in advancing and promoting democratic political system. Nowadays, in the aftermath of globalization, democracy became the system applied in globalized society. This is due to its system that does not inhibit freedom and equality rather promotes it, compared to communitarian or utilitarian systems.

Address social problems The rise of international and regional blocs gives leeway to address social problems or concerns and challenges through regional and global policies. Such idea points out to the fact that regional trade blocs programmed policies in which helps to alleviate social problems and concerns of its fellow members of the union and thus promote global policies and strengthen regional ties for further progress and development. Moreover, regional trade blocs promote social awareness and create programs which help sustain social stability and solve social problems in a global perspective. Such helpful programs further enhance regional trade blocs popularity and economic development, bolstering unity between members of the union. Fraternal support from each member reinforces an intimate and powerful unity between countries of the same unions.

The change in territories and dynamics of political, economic, and social mobilization, as well as local and regional relations fostered by regional trade alliances in order to homogenized the global systems. It correlation relates to the fact that in helps to integrate global dynamics and structure. The dynamics of political, economic, and social mobilization changes when territories particularly belong to regional trade alliances influenced by the fraternity of members regarding a unified or homogenized platforms or regulations.

Harmonization of Standards Harmonization of standards promotes connectivity like in the case of certain telecommunication standards, comparability in the case of accounting method. These harmonization belongs to the primary goal of any regional trade blocs in which trying to connects various networks which offer standard services or productions like in the filed of telecommunication. The harmonization provides basic idea on how regional trade blocs under the umbrella and influence of the global trends affect other issues of society. The unified sets of procedures are used in order to create a unified and harmonized interaction between members and cooperation in all its endeavors such as social programs.

Preferential agreements do offer inroads towards more open markets this purpose basically strengthen the support for binding services trade policy at the multilateral level. Furthermore, one important factor which it helps to destroy is the breaking of the oligarchic systemthat is the monopoly of products and services. This preferential agreement opens the path towards a friendly partnership and exchange of production in which eventually create harmony and peace between countries which differed in social and cultural identities.

Trade liberalization is the effects of regional trade agreement which espouses welfare development of certain member country and the consequent gains from the trade at the regional level. This suggests that removal of trade barriers allows consumers and producers to purchase from the cheapest and most competitive source of supply. This leads to increase in adaptation during the late 80s and early 90s which became the main reason behind the current surge of the regional trade agreement.

Regional trade agreement used as a strategic move to consolidate peace and increase regional security among member countries such able project and program tried to forge geopolitical alliances and build up diplomatic ties. Moreover, the safety and security of each regional bloc is important in the process of economic changes and business transactions. The strategic move to consolidate peace and increase regional security is part and parcel of promoting the regional trade agreement that could be part of promoting the identity and attract other countries for subscription.

RTAs program promotes an anti-hegemonic dominance of powerful economy of develop countries. The hegemonic intervention of powerful countries can be prevented in the regional trade agreement with its programs and guidelines on unified actions and promotions of interests. The establishment of such programs in the agreement of regional trade is suggestive of its being protectionist about each members interests. The promotion of economic development is through the increase in intra-industrial trade.

Conclusion Therefore such purposes underlined in this paper suggest the important role of the regional trade blocs in the development and progress of each countrys economic zones and other domains.

Regional Trade Blocks at a Glance

Different regional blocks have come up in the period of economic liberalization in various parts of the world. Some of the functionally active trading blocks are listed below: NAFTA (North American Free Trade Agreement) EU (European Union) ASEAN (Association of Southeast Asian Nations) MERCOSUR (Mercado Comun del Cono Sur)

CEFTA (Central European Free Trade Agreement) GAFTA (Greater Arab Free Trade Area) SAARC (South Asian Association for Regional Cooperation) CEMAC (Economic and Monetary Community of Central Africa) East African Community (EAC) SACU (South African Customs Union) PARTA or PIF (Pacific Regional Trade Agreement) AEC (African Economic Community) CACM (Central American Common Market)

A particular country may be a member of more than one regional trading block. However, in order to do away with overlapping, such nations are normally put within the most dynamic trade block.

Activities of Trade Blocks

The number of latest agreements, meetings and other activities undertaken by the regional trade

blocks The pattern of future planning regarding trade promotion and focus on intergovernmental

associations and quicker timeframe for policy implementation Number of practical achievements attained by the member countries

In practice, the success of trading blocks crucially depends on the performance of the member countries. To ensure effective trade promotion the trading blocks need to be more flexible and accommodative. Besides trade promotion, the regional blocks are also expected to take part in other domains of the member countries. Effective management of trade block activities ensures all-round development of the member nations.