Trade bloc explained

A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.

Trade blocs can be stand-alone agreements between several states (such as the USMCA) or part of a regional organization (such as the European Union). Depending on the level of economic integration, trade blocs can be classified as preferential trading areas, free-trade areas, customs unions, common markets, or economic and monetary unions.[1]

Use

Historic trading blocs include the Hanseatic League, a Northern European economic alliance between the 12th and 17th centuries, and the German Customs Union, formed on the basis of the German Confederation and subsequently the German Empire from 1871. Surges of trade bloc formation occurred in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism. By 1997, more than 50% of all world commerce was conducted within regional trade blocs.[2] Economist Jeffrey J. Schott of the Peterson Institute for International Economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNP, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization.[3]

Some advocates of global free trade are opposed to trading blocs. Trade blocs are seen by them to encourage regional free trade at the expense of global free trade.[4] Those who advocate for it claim that global free trade is in the interest of every country, as it would create more opportunities to turn local resources into goods and services that are both currently in demand and will be in demand in the future by consumers.[5] However, scholars and economists continue to debate whether regional trade blocs fragment the global economy or encourage the extension of the existing global multilateral trading system.[6] [7]

Terminology

A common market is seen as a stage of economic integration towards an economic union[8] or possibly towards the goal of a unified market.

A single market is a type of trade bloc in which most trade barriers have been removed (for goods) with some common policies on product regulation, and freedom of movement of the factors of production (capital and labour) and of enterprise and services.

Statistics

Trade blocPopulationGross domestic productMembers
20062007growthper capita
Economic and monetary unions
EMU324,879,19510,685,946,928,31012,225,304,229,68614.41%37,630
OECS (sovereign states)593,9053,752,679,5623,998,281,7316.54%6,732
OII504,47612,264,278,32914,165,953,20015.51%28,081
CCCM6,418,41739,616,485,62343,967,600,76510.98%6,850
Customs and monetary unions
CEMAC39,278,64551,265,460,68558,519,380,75514.15%1,490
UEMOA90,299,94550,395,629,49458,453,871,28315.99%647
Customs unions
CAN96,924,486281,269,141,372334,172,968,64818.81%3,448
EAC127,107,83849,882,030,44361,345,180,04122.98%483
EUCU574,602,74515,331,827,900,20217,679,376,474,71915.31%30,768
GCC36,154,528724,460,151,595802,641,302,47710.79%22,200
MERCOSUR271,304,9461,517,510,000,0001,886,817,000,00012.44%9,757
SACU58,000,0001,499,811,549,1871,848,337,158,28123.24%6,885
Preferential trade areas and Free trade areas
AANZFTA-ASEAN+32,085,858,84110,216,029,899,76411,323,947,181,80410.84%5,429
ALADI499,807,6622,823,198,095,1313,292,088,771,48016.61%6,587
AFTZ553,915,405643,541,709,413739,927,625,27314.98%1,336
APTA2,714,464,0274,868,614,302,7445,828,692,637,76419.72%2,147
CARIFORUM-EUCU-OCTs592,083,95015,437,771,092,52217,798,283,524,96115.29%30,060
CACM37,388,06387,209,524,88997,718,800,79412.05%2,614
CEFTA27,968,711110,263,802,023135,404,501,03122.80%4,841
CISFTA272,897,8341,271,909,586,0181,661,429,920,72130.62%6,088
DR-CAFTA-US356,964,47713,345,469,865,03714,008,686,684,0894.97%39,244
ECOWAS283,096,250215,999,071,943255,784,634,12818.42%904
EEA (EU + EFTA) 499,620,52114,924,076,504,59217,186,876,431,70915.16%34,400
EFTA-SACU68,199,9911,021,509,931,9181,139,385,636,88811.54%16,707
EAEC207,033,9901,125,634,333,1171,465,256,182,49830.17%7,077
USMCA449,227,67215,337,094,304,21816,189,097,801,3185.56%36,038
TPP25,639,622401,810,366,865468,101,167,29416.50%18,257
SAARC1,567,187,3731,162,684,650,5441,428,392,756,31222.85%911
SPARTECA35,079,659918,557,785,0311,102,745,750,17220.05%31,435
Pacific Alliance218,649,1151,371,197,216,1401,525,825,175,04511.28%6,978+This list is based on the data obtained from  Statistics Division.

Comparison between regional trade blocs

! colspan=9 Activities
Regional bloc Free TravelPolitical pact Other
Border-less
EUbgcolor=lightgreen in forcebgcolor=lightgreen in force7bgcolor=lightgreen in force2bgcolor=lightgreen in force 1bgcolor=lightgreen in forcebgcolor=lightgreen in force
(Schengen 1, 7, NPU and CTA 1)		bgcolor=lightgreen in forcebgcolor=lightgreen in force
(CFSP/ESDP 1)		bgcolor=lightgreen ESA 1, 7
EFTAbgcolor=lightgreen in forcebgcolor=lightgreen in force2, 7bgcolor=lightgreen in forcebgcolor=lightgreen in force 1, 7bgcolor=lightgreen in force 1, 7bgcolor=lightgreen ESA 1, 7
CARICOMbgcolor=lightgreen in forcebgcolor=lightgreen in forcebgcolor=lightgreen in force 1bgcolor=lightgreen in force 1 and
proposed common		bgcolor=lightgreen in force 1bgcolor=orange proposedbgcolor=orange proposedbgcolor=lightgreen NWFZ
AUECOWASbgcolor=lightgreen in force 1, 3bgcolor=lightgreen in force 1bgcolor=orange proposed[9] [10] bgcolor=lightgreen in force 1 and
proposed for 2012 1 and
proposed common		bgcolor=lightgreen in force 1bgcolor=orange proposedbgcolor=orange proposedbgcolor=lightgreen in forcebgcolor=lightgreen NWFZ1
ECCASbgcolor=lightgreen in force1bgcolor=lightgreen African Continental Free Trade Agreement (AfCFTA)1bgcolor=lightgreen in force1bgcolor=orange proposedbgcolor=lightgreen in force1bgcolor=lightgreen in forcebgcolor=lightgreen in forcebgcolor=lightgreen NWFZ1
EACbgcolor=lightgreen in forcebgcolor=lightgreen in forcebgcolor=yellow proposed for 2020sbgcolor=yellow proposed for 2024bgcolor=orange proposed?bgcolor=yellow proposed for 2023bgcolor=lightgreen NWFZ1
SADCbgcolor=lightGREEN in force1bgcolor=lightGREEN in force1bgcolor=yellow proposed for 2015bgcolor=yellow de facto in force 1 and proposed common for 2016bgcolor=orange proposed[11] bgcolor=lightgreen NWFZ1
COMESAbgcolor=lightGREEN in force1bgcolor=yellow proposed for 2010?bgcolor=yellow proposed for 2018bgcolor=lightgreen NWFZ1
Commonbgcolor=lightGREEN in force1bgcolor=yellow proposed for 2019bgcolor=yellow proposed for 2023bgcolor=yellow proposed for 2028bgcolor=yellow proposed for 2028bgcolor=lightgreen NWFZ1
Pacific Alliancebgcolor=lightgreen in forcebgcolor=lightgreen in forcebgcolor=lightgreen NWFZ
USANMERCOSURbgcolor=lightgreen in forcebgcolor=lightgreen in forcebgcolor=yellow proposed for 2015[12] bgcolor=lightgreen in forcebgcolor=yellow proposed for 2014[13] bgcolor=lightgreen NWFZ
CANbgcolor=lightgreen in forcebgcolor=lightgreen in force 1bgcolor=orange proposed1[14] bgcolor=lightgreen in forcebgcolor=lightgreen NWFZ
Commonbgcolor=YELLOW proposed for 2014 4bgcolor=YELLOW proposed for not after 2019bgcolor=YELLOW proposed for 2019bgcolor=YELLOW proposed for 2019bgcolor=lightGREEN in force[15] bgcolor=YELLOW proposed for 2019bgcolor=orange proposedbgcolor=lightgreen in forcebgcolor=lightgreen NWFZ
EEUbgcolor=lightgreen in forcebgcolor=lightgreen in force1bgcolor=lightgreen in forcebgcolor=orange Proposed[16] bgcolor=lightgreen in force[17] bgcolor=lightgreen in force 1
ALGCCbgcolor=lightgreen in forcebgcolor=lightgreen in force[18] bgcolor=orange proposedbgcolor=orange proposed 1bgcolor=lightgreen in forcebgcolor=lightgreen in force
Commonbgcolor=lightGREEN in force1bgcolor=yellow proposed for 2015bgcolor=yellow proposed for 2020bgcolor=orange proposedbgcolor=orange proposed[19]
ASEANbgcolor=lightgreen in force 5bgcolor=yellow proposed for 2015[20] bgcolor=orange proposed 8[21] bgcolor=lightgreen in force[22] bgcolor=yellowproposed for 2015[23] bgcolor=yellowproposed for 2020[24] bgcolor=lightgreen NWFZ
CAISbgcolor=lightgreen in force1bgcolor=orange proposed?bgcolor=lightgreen in force1bgcolor=lightgreen in force1bgcolor=orange proposedbgcolor=lightgreen NWFZ
CEFTAbgcolor=lightgreen in forcebgcolor=lightgreen RCC7
USMCAbgcolor=lightgreen in forcebgcolor=lightgreen in force 1, 7
SAARCbgcolor=lightgreen in force 1, 6bgcolor=orange proposedbgcolor=orange proposedbgcolor=lightgreen in force9
PIFbgcolor=yellow proposed for 20211bgcolor=lightgreen NWFZ1
1 not all members participating
2 involving goods, services, telecommunications, transport (full liberalisation of railways from 2012), energy (full liberalisation from 2007)
3 telecommunications, transport and energy - proposed
4 sensitive goods to be covered from 2019
5 least developed members to join from 2012
6 least developed members to join from 2017
7 Additionally some non member states also participate (the European Union, EFTA have overlapping membership and various common initiatives regarding the European integration).
8 Additionally some non member states also participate (ASEAN Plus Three)
9 Limited to "entitled persons" and duration of one year.

See also

Lists of trade blocs

Bibliography

Notes and References

  1. Mansfield and Milner 2005, 333.
  2. Milner 2002, 450.
  3. Schott 1991, 2.
  4. O'Loughlin and Anselin 1996, 136.
  5. Lal. Deepak. 1993. Trade Blocs and Multilateral Free Trade. Journal of Common Market Studies. 31. 3. 349–358. 10.1111/j.1468-5965.1993.tb00468.x.
  6. Milner 2002, 458.
  7. Mansfield and Milner 2005, 330.
  8. Web site: Stages of Economic Integration: From Autarky to Economic Union.
  9. Web site: WT/COMTD/N/11. wto.org. dead. https://web.archive.org/web/20090325011319/http://docsonline.wto.org/DDFDocuments/t/WT/COMTD/N11.DOC. 2009-03-25.
  10. Web site: WT/COMTD/N/21. wto.org. dead. https://web.archive.org/web/20090327074930/http://docsonline.wto.org/DDFDocuments/t/WT/COMTD/N21.doc. 2009-03-27.
  11. News: Prensa Latina . Prensa Latina . February 3, 2007 . dead . https://web.archive.org/web/20070927191014/http://www.plenglish.com/Article.asp?ID=%7BED24867F-2CDD-4DF8-9342-2FBF3AB80AB2%7D&language=EN . September 27, 2007 .
  12. Web site: WT/REG238/M/1. wto.org. dead. https://web.archive.org/web/20090304040054/http://docsonline.wto.org/DDFDocuments/t/WT/REG/238M1.doc. 2009-03-04.
  13. News: Definidos critérios para o Parlamento do Mercosul . Senado Federal – Notícias. February 3, 2007 .
  14. Twelfth Andean Presidential Council Act of Lima
  15. News: ? . CNN. February 3, 2007 .
  16. News: Russia, Kazakhstan, Belarus form Eurasian Economic Union. Washington Post. May 29, 2014. June 1, 2014.
  17. Web site: Archived . www.itar-tass.com . https://web.archive.org/web/20070930204709/http://www.itar-tass.com/eng/level2.html?NewsID=2847543&PageNum=0 . September 30, 2007.
  18. News: GCC customs union fully operational. 11 January 2015. The Peninsula. 2016-08-13. dead. https://archive.today/20150118080233/http://thepeninsulaqatar.com/news/middle-east/314466/gcc-customs-union-fully-operational. 18 January 2015.
  19. http://www.arabnews.com/?page=4&section=0&article=39348&d=11&m=2&y=2004&pix=world.jpg&category=World Yemen Proposes Replacing Arab League With Arab Union
  20. News: Asean Trade Mins Meet To Speed Up Plans For Single Market . Malaysia Dual Lingual Business News . February 3, 2007 . dead . https://web.archive.org/web/20070928203036/http://www.biznewsdb.com/english/newspage/newspage.asp?ID=60515103&file1=6&bulan=05&kw=wwqq . 2007-09-28 .
  21. News: Envisioning a single Asian currency . International Herald Tribune. February 3, 2007 .
  22. News: ASEAN To Sign Accord On Visa-Free Travel . AHN – All Headline News . February 3, 2007 . dead . https://web.archive.org/web/20070926223620/http://www.allheadlinenews.com/articles/7004181732 . 2007-09-26 .
  23. ASEAN Leaders Sign Five Agreements at the 12th ASEAN Summit, Cebu, the Philippines, 13 January 2007 . ASEAN Secretariat . 2007-01-13 . 2007-01-28 . On the first day of the 12th ASEAN Summit, five Agreements have been signed by ASEAN leaders – reinforcing their commitment in the continuing integration of ASEAN and enhancing political, economic and social cooperation in the region. . dead . https://web.archive.org/web/20120316154846/http://www.asean.org/19223.htm . 2012-03-16 .
  24. News: ASEAN defense ministers aim for security community . ABS-CBN . February 3, 2007 . https://web.archive.org/web/20060627071348/http://www.abs-cbnnews.com/storypage.aspx?StoryId=38152 . dead . June 27, 2006 .

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