2. Slide 1 / 14
What is a Trade Bloc?
A group of countries
→ Which are geographically close to each other
→ Have similar trade policies
→ With their mutual co-operation allow free flow of goods
Trade blocs have liberal rules for the member countries and
separate set of rules for the non-member countries
They facilitate trade to member countries of the group but
create barriers and block the trade of member countries
3. Slide 2 / 14
Types of Trade Blocs
Trade
Blocs
Free Trade
Area
NAFTA SAARC
Customs
Union
CACM
Common
Market
OPEC
Economic
Union
EU ALADI
4. Slide 3 / 14
Features of Trade Blocs
Voluntary in Character
Mutual Negotiations
Regional in Character
Divisions based on political considerations
Existence based on usefulness
5. Slide 4 / 14
Objectives of Trade Blocs
→ Reduction of trade barriers among the member countries
→ Maintaining better relations
→ Imposing barriers on non member countries
→ Promoting free transfer of labour, capital and other factors
→ Creating common currency and Central Bank
→ Collective Bargaining
→ Assisting member countries
→ Enhancing welfare of consumers
→ Generating competition
→ Promoting Higher Employment
6. Slide 5 / 14
Positive Effects of Trade Blocs
→ Economic Integration
→ Co-operative Spirit
→ Expansion of Markets
→ Growth and Development of the region
→ Uniform policies
→ Increase in trade
→ Product and Market Development
→ Benefits to consumers of member countries
→ Free transfer of resources / factors
7. Slide 6 / 14
Negative Effects of Trade Blocs
Negative effects are for the non-member countries
→ Common External Barriers
→ Absence of Collective Bargaining
→ Affects Competition
→ Affects global and international trade
→ High Tariffs
→ Import Restrictions
→ Loss of Political Sovereignty
8. Slide 7 / 14
Trade Blocs & Intra-regional trade
Intra-regional trade means trade carried on within one trading blocs
Trade Blocs have contributed the following favorable factors for the growth of Intra-regional
Trade
Removal of trade barriers
Transfer of labour and capital
Uniformity in political and economic policies
Close relations between members
Transport and other infrastructural facilities
Common external barriers on non members
Common economic policy
9. Type: Free Trade Area
Slide 8 / 14
NAFTA
NAFTA stands for North American Free Trade Agreement
An agreement signed by Canada, Mexico, and the United
States
It came into force on January 1, 1994.
It is the most powerful trade bloc of the world
NAFTA has two supplements:
North American Agreement on Environmental Cooperation (NAAEC)
North American Agreement on Labour Cooperation (NAALC)
Intra-regional trade between the member countries is US $ 767
Billion
10. Slide 9 / 14
OPEC
OPEC stands for Organization of the Petroleum Exporting Countries.
It was established on 14th September, 1960
An oil cartel whose mission is to coordinate the policies
of the oil-producing countries.
It is headquartered in Vienna, Austria
Member Countries:
1. Iraq
2. Kuwait
3. Iran
4. Saudi Arabia
5. Venezuela
6. Libya
7. United Arab
Emirates
8. Qatar
9. Indonesia
10.Algeria
11.Nigeria
12.Ecuador
13.Angola
14.Gabon.
Type: Common Market
11. Slide 10 / 14
ASEAN
ASEAN stands for Association of Southeast Asian Nations.
It was formed on 8th August 1967.
It is a political and economic organisation of ten countries
located in Southeast Asia
Type: Economic Union
Members:
1. Indonesia
2. Malaysia
3. Philippines
4. Singapore
5. Thailand
6. Brunei
7. Myanmar
8. Cambodia
9. Laos
10. Vietnam
It’s aims include:
→ Accelerating economic growth
→ Social progress
→ Cultural development among its members
→ Protection of regional peace and stability
→ Opportunities for member countries to discuss
differences peacefully
12. Type: Free Trade Area
Slide 11 / 14
SAARC
SAARC stands for South Asian Association for Regional Cooperation
Headquartered in Kathmandu, Nepal
It was established on 8th December 1985
Members:
1. Afghanistan
2. Bangladesh
3. Bhutan
4. India
5. Maldives
6. Nepal
7. Pakistan
8. Sri Lanka
The SAARC policies aim to promote:
Welfare economics
Collective self-reliance among the countries of South Asia
Accelerate socio-cultural development in the region
Develop good external relations
13. Type: Economic Union
Slide 12 / 14
EU
EU stands for European Union.
Came into existence on 1st January 1958
It is headquartered at Brussels, Belgium
It has 28 member countries:
1. United Kingdom
2. Belgium
3. Finland
4. France
5. Germany
6. Netherlands
7. Norway
8. Poland
9. Portugal
10. Greece and 18 more
In January 1999, a common currency € (Euro)
was introduced
EU offers financial aid to the developing countries
It is a strong trade bloc politically, industrially
and economically
14. Slide 13 / 14
CACM
CACM stands for Central American Common Market.
Type: Customs Union
It was established on 15th December 1960.
Headquartered in Guatemala City.
It consists of 5 Central American member countries:
1. Guatemala
2. Honduras
3. El Salvador
4. Nicaragua
5. Costa Rica
15. Slide 14 / 14
ALADI
ALADI is a Spanish abbreviation for Latin American
Integration Association.
It replaced Latin American Free Trade Agreement
(LAFTA)
Type: Economic Union
It was established on 12 August 1980
It has 13 member countries:
1. Argentina
2. Bolivia
3. Brazil
4. Chile
5. Colombia
6. Cuba
7. Panama
8. Mexico
9. Paraguay
10.Ecuador
11.Peru
12.Uruguay
13.Venezuela
ALADI aims at
Harmonious and balanced socio-economic
development
Progressive establishment of a Latin-
American Common Market.
