Trade Blocs And Agreements

Trade blocs are relationships between countries generally located in the same region to facilitate free trade agreements. Trade blocs include the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA), the Association of South Asian Nations (ASEAN), the European Union (EU), Mercado Comun del Sur (Mercosur) and the Southern African Development Community (SADC). Southeast Asia has experienced unprecedented and astonishing economic growth over the past three decades since the creation of ASEAN. In 1967, ASEAN`s total trade was $10 billion. In 2006, total trade reached $1.4 trillion. In recent years, there has been a flood of bilateral trade agreements between countries and the emergence of regional trading blocs. The European Union now has more than 30 separate international trade agreements, including those with countries such as Colombia and South Korea. It`s Nafta. NAFTA is now the largest trade agreement on earth, with its two complements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labour Cooperation (NAALC). The combined effects on trade, labour and environmental legislation have created a colossal force in trade, which determines when and how all Canadian, American and Mexican products and services are distributed among their most powerful consumers, from each other. Trade blocs should distort world trade and reduce the positive effects of specialization and the exploitation of comparative advantages.

The World Trade Organization allows trading blocs to be less protected from third countries than to the creation of the trading bloc The most sophisticated ATRs include rules on investment flows, coordination of competition policy, agreements on environmental policy and the free movement of workers. Trade blocs can be autonomous agreements between several states (such as the North American Free Trade Agreement) or be part of a regional organization (such as the European Union). Depending on the degree of economic integration, trading blocs can be considered preferential trade zones, free trade zones, customs union unions, common markets or economic and monetary unions. [1] A regional trading bloc is a group of countries in a geographic region that protect themselves against imports from non-members. Trade blocs are a form of economic integration that is increasingly shaping the global trade model. There are different types of trading blocs: easier access to each other`s markets means that trade between members is likely to increase. The creation of trade outcomes is possible when free trade replaces high-cost domestic producers with lower costs and more efficient imports. Since low-priced imports lead to lower prices, there is a “consumption effect” with increased demand due to lower prices. The World Trade Organization (WTO) was established in 1995 during the GATT negotiations in Uruguay. The WTO has officially succeeded THE GATT. The WTO is the only international organization dealing with global rules of trade between nations. Its main role is to ensure that trade is as fluid, predictable and as free as possible.

The WTO is focused on its multilateral trading system, which operates by seeking consensus among all Member States (over 150). The concept of consensus facilitates cooperation and, potentially, an agreement that is most beneficial to all the countries concerned.

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