TRADING BLOCKS

1. TRADING BLOCKS
George V James

2. Contents
Meaning
Types of Trading Blocks
Major Trading Blocks
Various Blocks in brief

3. Meaning
Group of countries
Existence within a geographical region.
Motive is to protect themselves from the
imports of non-members
A form of economic integration
increasingly shaping the pattern of
world trade.

4. TYPES OF TRADING BLOCS
Major Types of Trading Blocs:-
1.Preferential Trade Area (PTA’s)
2.Free Trade Area
3.Customs Union
4.Common Market

5. MAJOR TRADE BLOCS
A.EU (European Union)
B.NAFTA (North American Free Trade
Agreement)
C.OPEC (Organisation of Petroleum Exporting
Countries)
D.ASEAN (Association of South East Asian
Nations)
E.SAARC ( South Asian Association for
Regional Cooperation)
F.MERCOSUR (Mercado Comun del Cono
Sur, also known as Southern Common
Markets (SCCM)

6. A. European Union (EU)
The world’s largest trading bloc.
The 2
nd
largest economy in the world.
Originally called the “Economic Community”.
(Common Market or The Six)
Formed from the ‘Treaty of Rome’ in 1957.
It comprised of 6 members- Germany, France, Italy,
Belgium, Netherlands and Luxemburg.
At present it comprises of 27
member states.

7. Objectives of European Union
Setting up a common market for all
goods & services by eliminating all
trade barriers.
Promoting free trade among the
members.
Continuous and balanced expansion.
Closer relations between the member
states.

8. B. North American Free Trade
Agreement (NAFTA)
Initially bilateral trade between Canada & U.S.
NAFTA went into effect in January 1,1994 after
the joining of Mexico, creating a trilateral trade
bloc in North America.
World’s largest free trade area.
NAFTA has two supplements: the North American
Agreement on Environmental
Cooperation (NAAEC) and the North
American Agreement on Labour
Cooperation (NAALC).

9. Provisions of NAFTA
Eliminate barriers to trade & investment
between US, Canada & Mexico.
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.

10. C. Organisation of Petroleum Exporting
Countries (OPEC)
A permanent, intergovernmental Organization, created at
the Baghdad Conference on September 10–14, 1960 ( Iraq,
Kuwait, Iran, Saudi Arabia and Venezuela ).
Later joined by 8 more countries.
The main objective is to coordinate and unify petroleum
policies among the member countries.
To secure fair and stable price for petroleum producers.
Proper price and regular supply for petroleum consuming
nations.
Its Headquarter is in Vienna, Austria.

11. D. Association of Southeast Asian
Nations (ASEAN)
Formed 8
th
August,1967 (Indonesia, Malaysia,
Philippians, Singapore & Thailand)
Later joined by Brunei, Burma, Cambodia,
Laos & Vietnam
Established ASEAN Free Trade Area (AFTA)
Headquarter- Jakarta, Indonesia.

12. Aims of AFTA:-
Primary goals of AFTA are:-
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.

13. Objectives of ASEAN
Accelerating Economic Growth.
Social Progress.
Cultural Development among its
members.
Protection of regional peace and
stability.
Discuss issues peacefully.

14. E. South Asian Association for
Regional Cooperation (SAARC)
Established on 8
th
December 1985
Member Countries- Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan & Sri Lanka
Headquarter- Kathmandu, Nepal

15. Objectives of SAARC
to promote the welfare of the people of South Asia
and to improve their quality of life
to accelerate economic growth, social progress and
cultural development in the region
to promote and strengthen selective self-reliance
among the countries of South Asia
to contribute to mutual trust, understanding and
appreciation of one another's problems
to strengthen cooperation with other developing
countries
to maintain peace in the region

16. The SAARC Secretariat

17. SAPTA
•The council of ministers have signed the
SAARC preferential trading arrangement
agreement on April 11, 1993.
Objectives:-
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

18. F. MERCOSUR; Mercado Comun del
Cono Sur
•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.