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Trade bloc

Intergovernmental open trading group

Trade bloc

Intergovernmental open trading group

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.

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. 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 GNI, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization.

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. 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. 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.

Terminology

A common market is seen as a stage of economic integration towards an economic union 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

Selection of GDP PPP data (top 10 countries and blocs) in no particular order
Trade blocPopulationGross domestic product(USD)Members20062007growthper capitaEconomic and monetary unionsCustoms and monetary unionsCustoms unionsPreferential trade areas and Free trade areas
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
CEMAC39,278,64551,265,460,68558,519,380,75514.15%1,490
UEMOA90,299,94550,395,629,49458,453,871,28315.99%647
CAN96,924,486281,269,141,372334,172,968,64818.81%3,448
EAC127,107,83849,882,030,44361,345,180,04122.98%483{{Collapsible listtitle=5}}
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
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{{Collapsible listtitle=6712 CCCM members33 EUCU members3 OII members
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

Comparison between regional trade blocs

ActivitiesRegional blocFree Trade AreaEconomic and monetary unionFree TravelPolitical pactDefence pactOtherCustoms unionSingle marketCurrency unionVisa-freeBorder-less
**EU**in forcein force7in force2in force 1in forcein force
(Schengen 1, 7, NPU and CTA 1)in forcein force
(CFSP/ESDP 1)ESA 1, 7
**EFTA**in forcein force2, 7in forcein force 1, 7in force 1, 7ESA 1, 7
**CARICOM**in forcein forcein force 1in force 1 and
proposed commonin force 1proposedproposedNWFZ
**AU**ECOWASin force 1, 3in force 1proposedin force 1 and
proposed for 2012 1 and
proposed commonin force 1proposedproposedin forceNWFZ1
ECCASin force1African Continental Free Trade Agreement (AfCFTA)1in force1proposedin force1in forcein forceNWFZ1
EACin forcein forceproposed for 2020sproposed for 2024proposed?proposed for 2023NWFZ1
SADCin force1in force1proposed for 2015de facto in force 1 and proposed common for 2016proposedNWFZ1
COMESAin force1proposed for 2010?proposed for 2018NWFZ1
**Common**in force1proposed for 2019proposed for 2023proposed for 2028proposed for 2028NWFZ1
Pacific Alliancein forcein forceNWFZ
**USAN**MERCOSURin forcein forceproposed for 2015in forceproposed for 2014NWFZ
CANin forcein force 1proposed1in forceNWFZ
**Common**proposed for 2014 4proposed for not after 2019proposed for 2019proposed for 2019in forceproposed for 2019proposedin forceNWFZ
**EEU**in forcein force1in forceProposedin forcein force 1
**AL**GCCin forcein forceproposedproposed 1in forcein force
**Common**in force1proposed for 2015proposed for 2020proposedproposed
**ASEAN**in force 5proposed for 2015proposed 8in force{{cite newstitle=ASEAN To Sign Accord On Visa-Free Travelpublisher=AHN – All Headline Newsdate=February 3, 2007url=http://www.allheadlinenews.com/articles/7004181732url-status=deadarchive-url=https://web.archive.org/web/20070926223620/http://www.allheadlinenews.com/articles/7004181732archive-date=2007-09-26
**CAIS**in force1proposed?in force1in force1proposedNWFZ
**CEFTA**in forceRCC7
**USMCA**in forcein force 1, 7
**SAARC**in force 1, 6proposedproposedin force9
**PIF**proposed for 20211NWFZ1

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.

Lists of trade blocs

  • List of preferential trade areas
  • Lists of free trade agreements
    • List of bilateral free trade agreements
    • List of multilateral free trade agreements
  • 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 Currency union.PNG|Monetary unions Customs Unions World.svg|Customs unions worldwide Free Trade Areas.PNG|Free trade areas worldwide Mercosur - Member states.png|Mercosur

References

Bibliography

  • Mansfield, Edward D. and Helen V. Milner, "The New Wave of Regionalism" in
  • Milner, Helen V., "International Trade" in

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.
  6. Milner 2002, 458.
  7. Mansfield and Milner 2005, 330.
  8. "Stages of Economic Integration: From Autarky to Economic Union".
  9. "WT/COMTD/N/11".
  10. "WT/COMTD/N/21".
  11. (February 3, 2007). "Prensa Latina". Prensa Latina.
  12. "WT/REG238/M/1".
  13. (February 3, 2007). "Definidos critérios para o Parlamento do Mercosul". Senado Federal – Notícias.
  14. Twelfth Andean Presidential Council [http://www.comunidadandina.org/INGLES/documentos/documents/Act10-6-00.htm Act of Lima] {{webarchive. link. (2010-07-07)
  15. (October 2010). ["?"](http://www.cnn.com/2006/WORLD/americas/11/24/chile.southamerica.ap/index.html?eref=rss_latest }} {{Dead link). CNN.
  16. (May 29, 2014). "Russia, Kazakhstan, Belarus form Eurasian Economic Union". Washington Post.
  17. (May 2023). "Archived".
  18. (2016-08-13). "GCC customs union fully operational". The Peninsula.
  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], ''[[Agence France-Presse]]'', 11 February 2004
  20. (February 3, 2007). "Asean Trade Mins Meet To Speed Up Plans For Single Market". Malaysia Dual Lingual Business News.
  21. (February 3, 2007). "Envisioning a single Asian currency". International Herald Tribune.
  22. (2007-01-13). "ASEAN Leaders Sign Five Agreements at the 12th ASEAN Summit, Cebu, the Philippines, 13 January 2007". ASEAN Secretariat.
  23. (February 3, 2007). "ASEAN defense ministers aim for security community". ABS-CBN.
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