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- Description 1
Advantages and Disadvantages of trade blocs 2
- Advantages 2.1
- Disadvantages 2.2
- Lists of trade blocs 3
- Statistics of trade blocs 4
- Comparison between regional trade blocs 5
- See also 6
- References 7
- Bibliography 8
Historic economic blocs include the Hanseatic League, a trading alliance in northern Europe in existence between the 13th and 17th centuries and the German Customs Union (Zollverein) initiated in 1834, formed on the basis of the German Confederation and subsequently German Empire from 1871. Surges of trade bloc formation were seen 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.
- Mansfield, Edward D. and Helen V. Milner, "The New Wave of Regionalism" in Diehl, Paul F. (2005). The Politics of Global Governance: International Organizations in an Interdependent World. Boulder: Lynne Rienner Publishers.
- Milner, Helen V., "International Trade" in Carlsnaes, Walter; Thomas Risse; Beth A. Simmons (2002). Handbook of International Relations. London:
- O'Loughlin, John; Luc Anselin (1996). "Geo-Economic Competition and Trade Bloc Formation: United States, German, and Japanese Exports, 1968-1992". Economic Geography 72 (2): 131–160.
- Schott, Jeffrey J. (1991). "Trading blocs and the world trading system". World Economy 14 (1): 1–17.
- Schott 1991, 1.
- Milner 2002, 450.
- Schott 1991, 2.
- O'Loughlin and Anselin 1996, 136.
- Milner 2002, 458.
- Mansfield and Milner 2005, 330.
- Mansfield and Milner 2005, 333.
- "Prensa Latina". Prensa Latina. February 3, 2007.
- "Definidos critérios para o Parlamento do Mercosul". Senado Federal – Notícias. February 3, 2007.
- Twelfth Andean Presidential Council Act of Lima
- "?". CNN. February 3, 2007.
- "Russia, Kazakhstan, Belarus form Eurasian Economic Union". Washington Post. May 29, 2014. Retrieved June 1, 2014.
- GCC countries postpone customs union move
- Yemen Proposes Replacing Arab League With Arab Union, Agence France-Presse, 11 February 2004
- "Asean Trade Mins Meet To Speed Up Plans For Single Market". Malaysia Dual Lingual Business News. February 3, 2007.
- "Envisioning a single Asian currency". International Herald Tribune. February 3, 2007.
- "ASEAN To Sign Accord On Visa-Free Travel". AHN – All Headline News. February 3, 2007.
"ASEAN Leaders Sign Five Agreements at the 12th ASEAN Summit, Cebu, the Philippines, 13 January 2007" (Press release). ASEAN Secretariat. 2007-01-13. Retrieved 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.
- "ASEAN defense ministers aim for security community". ABS-CBN. February 3, 2007.
1 not all members participating yet
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 NATO have overlapping membership and various common initiatives regarding the European integration).
8 Additionally some non member states also participate (ASEAN Plus Three)
Comparison between regional trade blocs
|Trade bloc||Population||Gross domestic product (USD)||Members|
|Common markets, Economic and Monetary unions|
|Customs and monetary unions|
|Preferential trade areas and Free trade areas|
Statistics of trade blocs
- List of preferential trade areas
- List of free trade areas (bilateral, multilateral)
- List of customs unions
- List of common markets
- List of economic unions
- List of monetary unions
- List of customs and monetary unions
- List of economic and monetary unions
Lists of trade blocs
Interdependence: Because trading blocs increase trade among participating countries, the countries become increasingly dependent on each other. A disruption of trade within a trading bloc as a result of a natural disaster, conflict or revolution may have severe consequences for the economies of all participating countries.
Concessions: No country wants to let foreign firms gain domestic market share at the expense of local companies without getting something in return. Any country that wants to join a trading bloc must be prepared to make concessions. For example, in trading blocs that involve developed and developing countries, such as bilateral agreements between the U.S. or the EU and relatively poor Asian, Latin American or African countries, the latter may have to allow multinational corporations to enter their home markets, making some local firms uncompetitive.
Regionalism vs. Multinationalism: Trading blocs bear an inherent bias in favor of their participating countries. For example, Sovereignty: A trading bloc, particularly when it is coupled with a political union, is likely to lead to at least partial loss of sovereignty for its participants. For example, the European Union, started as a trading bloc in 1957 by the Treaty of Rome, has transformed itself into a far-reaching political organization that deals not only with trade matters, but also with human rights, consumer protection, greenhouse gas emissions and other issues only marginally related to trade.
The disadvantages, on the other hand, include: regionalism vs. multinationalism, loss of sovereignty, concessions, and interdependence.
Trade Effects Trade blocs eliminate tariffs, thus driving the cost of imports down. As a result, demand changes and consumers make purchases based on the lowest prices, allowing firms with a competitive advantage in production to thrive.
Competition: Trade blocs bring manufacturers in numerous countries closer together, resulting in greater competition. Accordingly, the increased competition promotes greater efficiency within firms.
Economies of Scale: The larger markets created via trading blocs permit economies of scale. The average cost of production is decreased because mass production is allowed.
Foreign Direct Investment: An increase in foreign direct investment results from trade blocs and benefits the economies of participating nations. Larger markets are created, resulting in lower costs to manufacture products locally.
There are five major advantages of trade bloc agreements: foreign direct investment, economies of scale, competition, trade effects, and market efficiency.
Advantages and Disadvantages of trade blocs
Trade blocs can be stand-alone agreements between several states (such as the European Union). Depending on the level of economic integration, trade blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions.
Advocates of worldwide free trade are generally opposed to trading blocs, which, they argue, encourage regional as opposed to global free trade. Scholars and economists continue to debate whether regional trade blocs are leading to a more fragmented world economy or encouraging the extension of the existing global multilateral trading system.