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International Business

Regional Economic Integration EU, NAFTA, ASEAN


& Indias Free Trade Agreements An Analysis

Submitted To Submitted By (Group-C3)


Prof. R Sugant Debdeep Ghosh (16133)
Dimpi Kumari (16134)
Jagan P G (16136)
Kamal Chelani (16137)
Ketan Kunjekar (16139)
Content
IntroductionOf Economic integration
European Union
NAFTA
ASEAN
IFTA & SAFTA
Impact of BREXIT & TRUMPH
Learning from Economic Integration.
Introduction
Regional Economic Integration
Agreement between countries in a
geographic region to reduce tariff and non-
tariff barriers to the free flow of goods,
service, and factors of production between
each other.
European Union

To understand European Union You Have


To Be a Genius or French.
-Madeleine Albright, US Secretary of
State, 1998
Introduction
The European Union (EU) is political partnership of 28
member states which are primarily located in Europe.
It has an area of 4,324,781 km2. And population of
around 510million.
19 member states and it is collectively referred to as
the Eurozone

Objective
Single market in which goods, people, and capital
move freely.
secure long period peace and stability in Europe
create a favourable environment for economic growth
Security
History
1949-1959
A peaceful Europe the beginnings of cooperation
1960-1969
A period of economic growth
1970-1979
A growing Community the first enlargement
1980-1989
The changing face of Europe - the fall of the Berlin Wall
1990-1999
A Europe without frontiers
2000-2009
Further Expansion
2010-today
Challenging decade
Structure
The European Council
The European Commission
The Council of the European Union
The European Parliament (EP)
Challenges
Rise of Anti-EU or Euroskeptic
Political Parties
Absence of Strong Leadership and
Planned Vision
Decreased Solidarity and Increased
Acrimony
Simultaneous Challenges
The Greece Crisis
Migratory Pressures
The UK Referendum
European Security Concerns
Countering Terrorism

Future Directions
Establishing Two Speeds
Muddling Through
A Tighter, More Integrated Configuration
Europe and India
The EU is India's number one trading partner
(13% of India's overall trade with the world in
2014-15)
EU exports to India grew from 21.3 billion in
2005 to 38.1 billion in 2015
The value of EU imports from India also increased
from 19.1 billion in 2005 to 39.4 billion in 2015
Trade in services almost tripled in the past decade,
increasing from 5.2billion in 2002 to 14 billion
in 2015
North American Free Trade Agreement
(NAFTA)

NFTA is one of the biggest Free Trade Agreement


across the world
The goal of NAFTA was to eliminate barriers to trade
and investment between the U.S., Canada and Mexico.
The implementation of NAFTA on January 1, 1994
Benefited Small Business lowering trade barriers.
Benefits of NAFTA
Job opportunity
Many American small businesses depend on exporting their products to
Canada or Mexico under NAFTA.
This trade supports over 140,000 small- and medium-sized businesses in the
US.
U.S Manufacturer gets low cost labours in Mexico.
Foreign exchange expanded sharply over the initial two decades, from
aprox $290 billion in 1993 to more than $1.1 trillion in 2016.
Cross-border trade was made easy

Challenges Faced by NAFTA


It was controversial like any Free Trade Agreement
Mexico may gain Americans Job
1992 Presidential candidate Ross Perot against the NAFTA
Perot ultimately lost the election, and the winner, Bill Clinton supported
NAFTA
Impact on United States of America
NAFTA has been a wealth for U.S. Farmers and landowners, helping U.S.
agricultural exports to Canada and Mexico is increased.
NAFTA imports were greater than before the competitiveness of American trades.
Nearly 63 percent of US manufacturing raw-materials are imported from Canada
and Mexico for further production of Made-In-America finished goods and
services.
US small business exporters first oversea customers are in Canada and Mexico.
Trade between three countries have supported trade over 140,000 small and
medium sized businesses.
US Manufacturing exports to Canada and Mexico have increased 257% and U.S
had a decent growth in manufacturing.
The growth in the field of digital economy and strengthen the U.S. promise to
safeguarding employment and environmental standards to United States labours.

Impact on Mexico

After NAFTA trade barriers which was eliminated. Mexicos


workforce was more utilised then earlier.
Most of the MNCs which was there its headquarter in U.S Were
setup in Mexico in terms of cheap Labour.
Impact on Canada
Canada received a modest positive economic benefit as measured by GDP.
Even before NAFTA Canada and USA had Free Trade Agreement since
1989.
Canadian manufacturing employment had a growth.
Protection to intellectual property rights was made stronger. It was helpful
to use US authorised computer software and chemical production system in
NAFTA countries.
Gives a platform for American investors to make a bids on Canadas
government bonds. So Canada flushed with more investments from United
States

Donald Trump on NAFTA


Has NAFTA 'destroyed our country?
NAFTA is a disaster in the US economy
Donald Trump Says NAFTA Was the Worst Trade Deal the U.S. Ever Signed
America has lost 5 million manufacturing jobs since 2000
Trump threatened to throw a 35% tax on manufactured goods from Mexico
and other imported goods
ASEAN
Introduction:
The ASEAN is a semi-annual
summit apprehended by Association
of Southeast Asian Nations. The
main agenda of the meeting is
economic and cultural development
to Southeast Asian countries.
ASEAN members are:

THAILAND, VIETNAM, INDONESIA, SINGAPORE,


PHILIPPINES, MALAYSIA, LAOS, MYANMAR,
CAMBODIA, BRUNEI DARUSSALAM and 1
Observer PAPUA NEW GUINEA.
ASEAN was established on 8th August 1967 in Bangkok.
Structure:
Objective:
To increase economic advancement among the associate
nations.
Communal improvement and cultural development through
combined activities for equality and peaceful community of
Southeast Asian nations.

Impact of ASEAN:
A single market and production base
A highly competitive economic region
A region of equitable economic development
A region fully integrated into the global economy
Challenges:
Different economic growth among
the associate nations.
High inflation rates between the
associate nations.
Different interest rates, and
exchange rates through associate
nations.
Among the ASEAN nations
different political and socio-cultural
create financial combination
challenging.
Future Direction:
ASEAN leaders need to exchange
their views on terrorism and
extremism, natural disasters,
climate change, irregular migration,
human trafficking and many more.
India Free Trade Agreement
The objective of a free trade agreement is to establish
trade relationship between two countries or group of
countries is to remove tariffs, quotas and preferences on
most of the goods between them.
India does regional trading arrangements towards the
overall objective of trade liberalization.
Regional trading arrangements have many forms like
free trade agreements, preferential trade agreements,
and comprehensive economic cooperation agreements.
The agreements open up foreign markets for sell and
productions. These agreements reduce barriers for other
country for imports & exports
Indias Trade agreements With Countries
India Bangladesh Free Trade Agreement
India Bhutan Free Trade Agreement
India Ceylon Free Trade Agreement
India Chile Free Trade Agreement
India Korea Free Trade Agreement
India Maldives Free Trade Agreement
India Myanmar Free Trade Agreement
India Nepal Free Trade Agreement
India Pakistan Free Trade Agreement
India Singapore Economic Cooperation (Foreign Trade Agreement)
SAFTA Trade Agreement
India Free Trade Agreement with Member MERCOSUR States
Exemption of Customs duty on certain goods when imported into I
ndia from the Malaysia, Singapore & Thailand
South Asian Free Trade Area (SAFTA)

SAFTA is an agreement among Afghanistan, Bangladesh,


Bhutan, India, Maldives, Nepal, Pakistan and Srilanka. Earlier
this agreement was held on 6th January 2004 in 12th SAARC
summit and the lattes amendments done by the 7th foreign
ministers to reduce the custom duties of all the trade good by
zero.
The agreement is about trade, supply, import and mainly tariff
concession. For example national duties and non-tariff
concession.
This agreement promoted the competition in the trade among
countries. And provide equal opportunity and benefits to the
countries involved in agreement. By this people of the country
also got benefited because this increase the transparency
Impact analysis: The reduction of trade barriers and transparent
trading make ease of doing business easier for trading partners.

India exports /Imports goods to countries


in April-October 2016.

Indias Percentage Share Indias major Percentage


export in Indias total Import country Share in Indias
country exports. total imports.
1. USA 16.2%
1. China 16.7%
2. UAE 12.0% 2. USA 5.6%
3. Hong 5.3% 3. UAE 5.6%
Kong
4. UK 3.3% 4. Saudi Arabia 5.3%

5. 3.1% 5. Switzerland 3.8%


Singapore

Source: Indian Economy Review(Dec


2016)
Future directions
Pakistan and Afghanistan may become more ungovernable. So we should
be aware about Indias security. India would should have a more pro-active
policy towards Pakistan. India require a strong military, well-regulated
borders and good governance to deal with the security and developmental
in future.

To deal with China India require an effective diplomatic and security


approach, Indias Tibet policy may require further fine-tuning. To become
safe against China we should build our military and economic capabilities
and our boarder security should be strong.

Visa Regime: - Since India is attracting more foreigners so we will have to


think about visa regime. Because more migrations into India from
neighbouring countries are expected to take place in the coming years. To
step with SAARC, India also need to think about higher education institute
development like vocational & professional training
Brexit

Brexit is an abbreviation for British exit.


Which refers to the June 23, 2016
The referendum shaken global market, including
currencies, causing the British pound fall to its
lowest level in decades
Prime Minister David Cameron, who was
supporting the UK to remain in the European
Union resigned and Home Secretary Theresa
May become Prime Minister
Reasons and Global Impact
Global competitiveness of British business, European debt
crisis.
Britain already opted out of the EUs monetary union and
using Pound sterling instead of the euro.
Brexit leaving many negative impact. The British pound
crashed by 115 against the dollar
Londons FTSE and Stoxx Europe 600 fell by 8%, many big
banks in like Barclays and Lloyds banking Group saw their
shares crashed by 30%
some expert says that it is good for U.K to leave EU because
of difference of opinion among EU members states like British
view is that purpose of the EU is to Have Super free-trade
zone, where German-French view is that EU is political block
Impact on India
Many companies have their offices in Britain
through that can access to the Europe but after
Brexit they have to relocate in other EU countries
which will increase cost for companies.
according to NASSCOM Indian IT industry which
worth 108$ Billion will have short term impact
many Indian IT company
UK accounts for about 17% of Indias total IT
export and other EU countries is at 11%, these
export will be affected by this and companies will
lower there IT budget Expenses will increase.
Positive side of Brexit
Britain is the most favourite destination for
everyone for higher education earlier when
Britain was part of EU it were forced by EU to
give scholarship to the citizens of Britain and EU
Reduction in pound value will make cheaper to
travel in UK which will increase tourist activity
in Britain
Indias export to UK is 3% and to EU is 17%
after Brexit it may increase because of
disturbance in currencies
Impact of Donald Trump on Indian
economy
Election of Donald Trump is not that much harmful
for India as comparison of China AND Pakistan
China is running a huge manufacturing trade
surpluses and Pakistan is soaking up US aid for many
years by pretending that it is fighting against terrorism
Many Indian IT outsourcing giants are heavy users of
H-1B Visas and in his earlier campaigns he said he
will scrape all Visas so it is a matter of concern for
India
Trump said that he will plans to implement tariffs and
quotas
Learning From Study
Help to increase Increase trade barriers
economic growth in against non member
countries. countries.
Increase FDI and Trade Diversion.

production. National Sovereignty-

Maintains political Require member


countries to give up
cooperation.
some degree of control
Trade creation
over key policies like
Employment trade, monetary and
opportunities fiscal policies.
References
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