This article provides information about the meaning and objectives of trading blocs:
A bloc means groups. Trading blocs means grouping of countries. It means a group of nations united for some common actions. Trading bloc is a voluntary grouping of countries of a specific region for common benefit.
It indicates regional economic integration of nations for mutual benefits. In general terms, regional trade blocks are associations of nations to promote trade within the block and defend its members against global competition.
Trading blocs are highly organised and based on shared interest to promote economic and social interest of the member countries.
There are different types of trading blocs such as Free Trade Area, Customs union, Economic Union, custom union, political union, common market etc. trading blocs leads to greater international bargaining power, increased competition between members, rapid spread of technology etc. Lowering trade barriers is one of the most obvious means of encouraging trade.
Objectives of Trading Blocs:
i. To remove trade restrictions among member nations.
ii. To improve social, political, economic and cultural relations among member nations.
iii. To encourage free transfer of resources.
iv. To establish collective bargaining.
v. To promote economic growth.
It stands for South Asian Association for Regional Cooperation. SAARC is an economic integration of South Asian countries for regional cooperation. It was established on 8th December 1985.
It consists of nations of South Asia that includes Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Srilanka. SAARC focus on areas such as Science and Technology, agricultural and rural development, tele-communication, postal services etc.
SAARC members signed an agreement called SAPTA (South Asian Preferential Trade Agreement). This agreement was signed to provide a framework for the exchange of trade concessions.
It aims at accelerating the process of economic and social development in member states. Afghanistan became the eighth member of this group in 2007.
ii. OPEC: Oil and Petroleum exporting countries:
Opec is an organisation consisting of world’s oil and petroleum exporting countries. The Organization of the Petroleum Exporting Countries (OPEC) was created in 1960 to unify and protect the interests of oil-producing countries. OPEC has maintained its headquarters in Vienna since 1965.
The original members of OPEC included Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. OPEC has since expanded to include seven more countries (Algeria, Angola, Indonesia, Libya, Nigeria, Qatar, and United Arab Emirates) making a total membership of 12.
The main objective of this bloc is to unify and coordinate member countries petroleum policies and to provide them with technical and economic aid. There has been a continuous increase in India’s share of export to opec countries.
iii. EU – European Union:
European Union is considered as one of the powerful trading bloc in the world. It was brought into existence in 1st January 1958 by the treaty of Rome. France, Western Germany, Italy, Belgium, Netherland and Luxemburg were the founder members of European Union. Initially it was known as European Economic Community (EEC).
It has a common currency called ‘EURO’. It also offers tremendous trade opportunities for non-European firms. At present there are twenty seven members in this bloc that includes: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
North American Free Trade Agreement the North American Free Trade Agreement or NAFTA is an agreement signed by the governments of the United States, Canada, and Mexico creating a trilateral trade bloc in North America.
The agreement came into force on January 1,1994 NAFTA is the most powerful trading blocs in the world. USA, Canada, Mexico are the members of NAFTA. The objective of NAFTA is to reduce barriers on the flow of goods, services and people among member nations, protection to investment in member countries etc. European Union and NAFTA accounts for over fifty percent of the world trade.