REGIONAL TRADING BLOCKS

Kiran Patel- 09080Madhusudan Pawar- 09081Mahera Chouhan- 09082Nirav Thakkar- 09103Pallavi Salunke- 09105Pooja Suri- 09114

Definition :A trade bloc is a large free trade zone or near-free trade zone

formed by one or more tax, tariff and trade agreements. Typically trade pacts that define such a bloc specify formal adjudication bodies, e.g. EUROPEAN UNION

MAJOR TRADE BLOCKS• 1) EUROPEAN UNION (EU)

• 2) NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

• 3)SINGAPORE –AMERICAN FREE TRADE AGREEMENT(SAFTA)

• 4) ORGANISATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)

• 5) ASSOCIATION OF SOUTH EAST ASIAN NATION (ASEAN)

• 6) SOUTH ASIAN ASSOCIATION OF REGIONAL CO-OPERATION (SAARC)

NEED FOR TRADE BLOCS• - Improves the relationship with the neighbouring countries

• - Abiding by theory of Comparative advantage

• - Promotion of specialization in production of certain goods

• - Meeting the demand of neighbouring countries or group members

• - Boosts countries to develop economic alliances to gain buying and selling power

Demerits of Trade blocs• In a regional trade blocs the price offered within the block is

lower as compared to the global prices. Thus, a level playing field is denied to countries outside the region.

The Organization of the Petroleum Exporting Countries (OPEC)

• History: – The Organization of the Petroleum Exporting

Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960.

– Its headquarters are located in Vienna , Austria

• Functions:– The OPEC MCs coordinate their oil production

policies in order to help stabilise the oil market and to help oil producers achieve a reasonable rate of return on their investments. This policy is also designed to ensure that oil consumers continue to receive stable supplies of oil.

OPEC FUND: The OPEC Fund for International Development is a multilateral development finance institution. It was established in January 1976, by the member

countries of the Organization of the Petroleum Exporting Countries. The Secretariat carries out the executive functions of the Organization in accordance

with the provisions of the OPEC Statute and under the direction of the Board of Governors

Members: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE, Venezuela.

Recent activities of OPEC

• Indonesia withdrew its membership from OPEC in 2008 as it became net importer of oil. But it expressed its interest to return back to OPEC once it becomes net exporter of oil.

ASEAN

• ESTABLISHED IN 1967 .

• ITS HEADQUARTER IS LOCATED IN JAKARTA, INDONESIA

• 5 FOUNDING MEMBERS : INDONESIA , MALAYASIA, • PHILLIPINES, SINGAPORE AND THAILAND.

• LATER ON JOINED BY BRUNEI, MYANMAR,VIETNAM ETC.• ASEAN FREE TRADE AREA (AFTA) . • ASEAN BEYOND TRADE HAS POLITICAL ROLE AS VISIBLE BY THE

FORMATION OF ASEAN REGIONAL FORUM OF WHICH CHINA, INDIA AND USA ARE MEMBERS.

• ASEAN AS A TRADING BLOC HAS BEEN A HUGE SUCCESS LEADING TO PROSPERITY AND ELIMINATION OF POVERTY IN THE MEMBER COUNTRY

SAARC•The South Asian Association for Regional Cooperation (SAARC) was established when its Charter was formally adopted on December 8, 1985 by the Heads of State or Government of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. •Its headquarters are located in Kathmandu , Nepal

•SAARC provides a platform for the peoples of South Asia to work together in a spirit of friendship, trust and understanding. It aims to accelerate the process of economic and social development in Member States. •In 2007 Afghanistan became its 8th member.

•SAARC has been a sheer failure.

SAARC (SOUTH ASIAN ASSOCIATION FOR REGIONAL

COOPERATION)

AREAS OF COOPERATION • Agriculture and Rural Development; • Health and Population Activities; • Women, Youth and Children; • Environment and Forestry; • Science and Technology and Meteorology; • Human Resources Development; and • Transport. • Recently, high level Working Groups have also been established to

strengthen cooperation in the areas of Information and Communications Technology, Biotechnology, Intellectual Property Rights, Tourism, and Energy.

The SAARC Secretariat • The SAARC Secretariat was established in Kathmandu on 16 January

1987. Its role is to coordinate and monitor the implementation of SAARC activities, service the meetings of the Association and serve as the channel of communication between SAARC and other international organisations. The Secretariat has also been increasingly utilised as the venue for SAARC meetings.

• The Secretariat comprises the Secretary General, seven Directors and the General Services Staff. The details of its officials and working divisions responsible for areas of work can be viewed under respective links.

The SAARC Secretariat

Established Centres

• 1.SAARC Agricultural Information Centre (SAIC), Dhaka• 2.SAARC Meteorological Research Centre (SMRC), Dhaka• 3.SAARC Tuberculosis Centre (STC), Kathmandu• 4.SAARC Documentation Centre (SDC), New Delhi• 5.SAARC Human Resources Development Centre (SHRDC), Islamabad • 6.SAARC Coastal Zone Management Centre, Maldives • 7.SAARC Information Centre, Nepal• 8.SAARC Energy Centre, Pakistan• 9.SAARC Disaster Management Centre, India

North American Free Trade Agreement

• The North American Free Trade Area is the trade bloc in North America created by the North American Free Trade Agreement (NAFTA) and its two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and the The North American Agreement on Labor Cooperation (NAALC), whose members are Canada, Mexico and the United States. It came into effect on 1 January 1994.

NAFTA Initialing Ceremony, October 1992. From left to right: (Standing) Mexican President Salinas, US

President Bush, Canadian Prime Minister Mulroney (Seated) Jaime Serra Puche, Carla Hills, Michael Wilson.

History of the implementation • The agreement was initially pursued by conservative

governments in the United States and Canada supportive of free trade, led by Canadian Prime Minister Brian Mulroney, U.S. President George H. W. Bush, and the Mexican President Carlos Salinas de Gortari.

• The three-nation NAFTA was signed on 17 December 1992, pending its ratification by the legislatures of the three countries.

• There was considerable opposition in all three countries, but in the United States it was able to secure passage after Bill Clinton made its passage a major legislative initiative in 1993.

The NAFTA Secretariat

• The NAFTA Secretariat, comprised of a Canadian Section, a Mexican Section and a United States Section, is responsible for the administration of the dispute settlement provisions of the North American Free Trade Agreement (NAFTA).

NAFTA

• BORN IN JANUARY 1994.• MEMBER NATIONS:US,CANADA AND MEXICO.• it’s the WORLD LARGEST FREE TRADE AREA.• UNDER NAFTA, ALL NON TARIFF BARRIERS TO

AGRICULTURE WERE ELIMINATED.• MANY TARRIFFS ARE BEING ELIMINATED OVER A

PEROID OF 5-15 YRS.

NAFTA

• TWO WAY TRADE BETWEEN US & MEXICO HAS INCREASED BY MORE THAN 55%.($11.6 BILLION).

• TWO WAY TRADE BETWEEN US &CANADA INCREASED MORE THAN 50%(16.3 BILLION.)

• HUGE BENEFITS HAVE ACCRUED TO THE NAFTA MEMBER COUNTRIES.

• NAFTA HAS BEEN A ROARING SUCCESSS.

European Union

• IT IS A FAMILY OF DEMOCRATRIC EUROPEAN COUNTRIES.

• COMMITED TO WORKING TOGETHER FOR PEACE AND PROSPERITY.

• ITS HISTORICAL ROOTSLIE IN THE SECOND WORLD WAR.• IDEA OF EUROPEAN INTEGRATION WAS CONCEIVED TO

PREVENT SUCH KILLING AND DESTRUCTION FROM EVER HAPPENING AGAIN.

Member states of the EU: – Austria, Belgium, Bulgaria, Cyprus, Czech

Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

The Euro: Our Currency

• The euro is the currency of 13 European Union countries: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovenia and Finland.

• Euro banknotes and coins have been in circulation since 1 January 2002 and are now a part of daily life for 315 million Europeans living in the euro area

• The Eurosystem, which consist of the European Central Bank (ECB) and the national central banks of the 13 countries belonging to the euro area, has the exclusive right to issue euro banknotes. All decisions on the designs, the denominations, etc. of the euro banknotes are taken by the ECB.

FIVE EU INSTITUTIONS

• EUROPEAN PARLIAMENT.(ELECTED BY PEOPLES OF MEMBER STATES)

• COUNCIL OF EUROPEAN UNION(REPRESENTING THE GOVERNMENTS OF MEMBER STATES).

• EUROPEAN COMMISION(DRIVING FORCE AND THE EXECUTIVE BODY).

• COURT OF JUSTICE.• COURT OF AUDITORS.

• THE RULE OF LAW IS FUNDAMENTAL TO THE EUROPERAN UNION.ALL EU DECISIONS ARE BASED ON TREATIES.,WHICH ARE AGREED BY ALL EU CONTRIES.

• EU CONSISTED OF JUST 6 COUNTRIES: BELGIUM,GERMANY,FRANCE,ITALY,LUXEMBOURG & NETHERLANDS.

• FURTHER ADDITIONS HAVE BEEN REAPEATEDLY TAKEN PLACE.• LAST INCREASE TOOK PLACE IN 2004,WITH 10 NEW COUNTRIES

JOINING IN.

ACHIEVEMENTS• IT HAS ENSURE FREEDOM,SECURITY & JUSTICE.• JOB CREATION.• REGIONAL DEVELOPMENT & ENVIRONMENTAL PROTECTION.• IT HAS HELPED RAISED LIVING STANDARDS,BUILT A SINGLE EUROPE

WIDE MARKET.• LAUNCHED THE SINGLE EUROPEAN CURRENCY- THE EURO.• IT HAS STRENGTHNED EUROPES VOICE IN THE WORLD.

CASE STUDYWHY ASEAN IS SUCCESSFUL AND SAARC HAS BEEN UNSUCCESSFUL.o ASEAN IS ONE OF THE MAJOR TRADING BLOCS IN THE WORLDo IT REPRESENTS 420 MILLION PEOPLE.o It's a LARGER TRADE BLOCK THAN NORTH AMERICA AND WESTERN

EUROPE.o SAARC REPRESENTS 22% OF HUMANITY.o THERE IS A CONTRADICTION, AN IRONY BETWEEN ASEAN & SAARC.o WHILE ASEAN HAS BEEN A ROARING SUCCESS & CALLED ASIAN

TIGERS ,SAARC HAS BEEN A SHEER FAILURE.

REASONS• IN ASEAN ALL COUNTRIES ARE OF EQUAL GEOGRAPHIC SIZE.• LEVEL OF ECONOMIC DEVELOPMENT IS THE SAME IN ALL COUNTRIES.• COMMON FEAR OF COMMUNIST CHINA• ALL OF THEM HAD SIMILAR ECONOMIC POLICIES.THEY ALL

INTRODUCED ECONOMIC LIBERALIZATION IN 1960s WHICH FURTHER ACCLERATED ECONOMIC GROWTH.

• WAY OF FUNCTIONING OF ASEAN BASED ON TWO PRINCIPLES: 1.MUSYAURARAH(CONSENSUS). 2.MUFAKAT(CONSULATATIONS).

INDIAs TRADE WITH ASEAN IS MORE THAN 20 TIMES THAN IN CASE OF SAARC. IN SOUTH ASIA INDIA IS THE LARGEST COUNTRY.IT OCCUPIES MORE THAN

70% OF GEOGRAPHICAL AREA. SO OTHER NATIONS FEEL THAT STRENGTHENING SAARC MEANS

EMPOWERING INDIA. SERIOUS BILATERAL DISPUTES BETWEEN TWO MAJOR SOUTH ASIAN POWERS

i.e INDIA & PAKISTAN. BILATERAL DISPUTES AND DIFFERENCES BETWEEN OTHER MEMBER COUNTRIES. INDIA,BANGLADESH DISPUTE. INDIA ,NEPAL DISPUTE. NEPAL MYNMAR DISPUTE. PAKISTAN BANGLADESH DISPUTE.

• VAST DIFFERENCE IN ECONOMIC DEVELOPMENT..

• INDIA IS A DEVELOPED ECONOMY OF SOUTH ASIA .OTHER CONTRIES ARE LESS DEVELOPED.

• PURCHASING POWER OF T HESE CONTRIES IS VERY LOW.THEY CANNOT ACT EVEN AS A MARKET OF INDIAN GOODS.

Thank you