A trade bloc is a preferential trade agreement between a range of nations, aimed at significantly reducing or removing trade barriers within the member states. Regional trade blocs are formed by neighbouring countries or countries that are in close proximity to each other. The two key features of a trade bloc is that (1) it involves a cutback or abolition of obstacles to trade, and (2) the trade liberalisation that is attained through the trade bloc is discriminatory in purview of the fact that it is applicable only to the member states of the trade bloc and non-member countries are shown prejudice in their dealings with members of the trade bloc.
The first aspect of trade blocs above is in line with the mission of the World trade Organisation (WTO) and its antecedent, the General Agreement on Tariffs and Trade (GATT). The principle of Non-discrimination under the GATT stipulates that no member state shall show prejudice between GATT members during the operations of world trade. In the same magnitude, the WTO offers an environment for negotiating agreements that are focused on reducing barriers to international trade and making sure that trade is carried out on a basis of openness, thus contributing to economic growth as well as development. Notably, although trade blocs have different structures, they are premised on the same objective, that is, to lessen trade barriers among member states.
The second aspect of trade blocs however seems to be in conflict with the motive of the GATT/WTO system. The preamble of the GATT is very clear on promoting non-discrimination in international trade by reinforcing the need for reciprocal and equally advantageous arrangements focused on substantial cutbacks in tariffs and other obstacles to trade and to the abolition of discriminatory treatment in international trade. Equally, under the WTO as well as under its predecessor, the GATT, trade discrimination is promoted through the use of the principles of the Most-Favoured-Nation (MFN) that requires treatment of other people equally as pertains to trade and the principle of National Treatment which stipulates that foreigners and locals should be treated equally in trade matters.
The above overview of regional trading blocs implies that different opinions can be stated regarding how trading blocs affect liberalisation of trade. [...]
Table of Contents
- CHAPTER 1: INTRODUCTION
- 1.2 Theme of the research
- 1.3 Aim of the research
- 1.4 Scope of the research
- 1.5 Research methodology
- CHAPTER 2: LITERATURE REVIEW
- 2.1 Trade blocs as stumbling blocks to liberalisation of trade
- 2.2 Regional trade blocs as building blocks to liberalisation of international trade
- 2.3 Regional trading blocs and political stability, democratic development and security issues
- 2.4 Concluding remarking on the review of literature
- CHAPTER 3: ANALYSIS OF THE REGIONAL TRADING BLOCS
- 3.1 Analysis of the selected regional blocs
- 3.1.1 The EU
- 3.1.2 NAFTA
- 3.1.3 ASEAN
- 3.1.4 MERCOSUR
- CHAPTER 4: HOW REGIONAL BLOCS ENHANCE TRADE LIBERALISATION
- 4.1 Evidence from trade statistics between regions
- 4.1.1 EU relations trade with other regional trading blocs/countries
- 4.1.1.1 EU and MERCOSUR
- 4.1.1.2 The EU, Latin America, and the Caribbean (LAC)
- 4.1.1.3 EU versus Africa, Caribbean and the Pacific (ACP)
- 4.1.2 ASEAN relations trade with other regional trading blocs/countries
- 4.2 Trading blocs and foreign direct investment (FDI)
- 4.3 Regional trading blocs and the gravity model
Objectives and Key Themes
This research aims to analyze the multifaceted role of regional trading blocs in the liberalization of international trade, challenging the prevailing view that they solely hinder such liberalization. The study will explore how these blocs can act as both building blocks and stumbling blocks, offering a nuanced perspective on their impact.
- The dual nature of regional trade blocs as both facilitators and impediments to international trade liberalization.
- The impact of specific regional trade blocs (EU, NAFTA, ASEAN, MERCOSUR) on global trade patterns.
- The relationship between regional trade blocs, foreign direct investment, and economic growth.
- The application of the gravity model to understand the effects of regional trade blocs.
- An examination of trade statistics to assess the actual impact of regional blocs on trade liberalization.
Chapter Summaries
CHAPTER 1: INTRODUCTION: This chapter introduces the concept of regional trade blocs, highlighting their dual nature: while they reduce trade barriers among member states, they also create discriminatory barriers against non-member states. This seemingly contradictory nature forms the core question of the research, exploring whether regional trade blocs ultimately support or hinder the overall liberalization of international trade as envisioned by organizations like the WTO and GATT. The chapter lays out the research's theme, aim, scope, and methodology, setting the stage for a detailed investigation.
CHAPTER 2: LITERATURE REVIEW: This chapter provides a comprehensive overview of existing literature on regional trade blocs. It discusses the growing number of these blocs worldwide and presents differing perspectives on their impact on international trade liberalization. Some sources view them as obstacles to free trade, while others emphasize their potential to foster greater liberalization. This review sets the context for the research by outlining the existing debate and identifying areas needing further investigation. The chapter also touches upon the relationship between regional trade blocs and factors like political stability and democratic development.
CHAPTER 3: ANALYSIS OF THE REGIONAL TRADING BLOCS: This chapter delves into a detailed analysis of selected regional trading blocs, including the EU, NAFTA, ASEAN, and MERCOSUR. Each bloc is examined individually, exploring its structure, membership, trade policies, and overall impact on trade flows within the bloc and with external partners. This in-depth analysis provides a case study foundation for assessing the general impact of regional trade blocs on trade liberalization, offering a nuanced comparison of diverse models and approaches.
CHAPTER 4: HOW REGIONAL BLOCS ENHANCE TRADE LIBERALISATION: This chapter presents evidence suggesting that regional trade blocs can enhance trade liberalization. The analysis utilizes trade statistics to demonstrate the increased trade between member states within these blocs. Specific examples are provided by examining trade relations among the EU and other regional blocs (MERCOSUR, LAC, ACP), and similarly for ASEAN. The chapter further investigates the relationship between regional trade blocs, foreign direct investment, and the gravity model of trade, aiming to present a comprehensive picture of the positive impacts of regional trade agreements.
Keywords
Regional trade blocs, international trade liberalization, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT), building blocks, stumbling blocks, European Union (EU), NAFTA, ASEAN, MERCOSUR, foreign direct investment (FDI), gravity model, trade statistics.
Frequently Asked Questions: A Comprehensive Language Preview
What is the overall topic of this research?
This research analyzes the multifaceted role of regional trading blocs in the liberalization of international trade. It challenges the notion that these blocs solely hinder liberalization, exploring how they can act as both "building blocks" and "stumbling blocks" to global trade.
What are the key themes explored in the research?
Key themes include the dual nature of regional trade blocs, their impact on global trade patterns (using the EU, NAFTA, ASEAN, and MERCOSUR as case studies), the relationship between these blocs, foreign direct investment (FDI), and economic growth, the application of the gravity model to understand their effects, and an examination of trade statistics to assess their actual impact on trade liberalization.
What is the structure of the research, chapter by chapter?
Chapter 1 (Introduction): Introduces the concept of regional trade blocs and their seemingly contradictory nature, outlining the research's theme, aim, scope, and methodology. Chapter 2 (Literature Review): Provides a comprehensive overview of existing literature, presenting different perspectives on the impact of these blocs on international trade liberalization. Chapter 3 (Analysis of Regional Trading Blocs): Delves into a detailed analysis of the EU, NAFTA, ASEAN, and MERCOSUR, examining their structures, policies, and impacts. Chapter 4 (How Regional Blocs Enhance Trade Liberalization): Presents evidence suggesting that these blocs can enhance trade liberalization, using trade statistics and examining the relationship between regional trade blocs, FDI, and the gravity model.
Which specific regional trading blocs are analyzed in detail?
The research focuses on four major regional trading blocs: the European Union (EU), the North American Free Trade Agreement (NAFTA), the Association of Southeast Asian Nations (ASEAN), and the Southern Common Market (MERCOSUR).
What methodologies are used in this research?
The research uses a mixed-methods approach. It involves a comprehensive literature review, detailed analysis of specific regional trading blocs, and an examination of trade statistics to assess the impact of these blocs. The gravity model is also applied to understand the effects of regional trade blocs.
What are the key findings or arguments presented in the research?
The research argues that regional trading blocs have a dual nature, acting as both facilitators and impediments to international trade liberalization. It aims to provide a nuanced perspective by examining both the positive and negative impacts of these blocs, challenging the simplistic view that they are solely obstacles to free trade.
What are the keywords associated with this research?
Keywords include: Regional trade blocs, international trade liberalization, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT), building blocks, stumbling blocks, European Union (EU), NAFTA, ASEAN, MERCOSUR, foreign direct investment (FDI), gravity model, trade statistics.
What is the aim of this research?
The research aims to analyze the multifaceted role of regional trading blocs in the liberalization of international trade, challenging the prevailing view that they solely hinder such liberalization. It seeks to provide a nuanced understanding of their impact on global trade.
Who is the intended audience for this research?
The intended audience is primarily academic, focusing on researchers and students in international trade, economics, and political science. The information is intended for structured academic analysis of themes within the subject matter.
- Quote paper
- Kelly Bill (Author), 2011, How Regional Trade Blocs affect Liberalisation of International Trade, Munich, GRIN Verlag, https://www.grin.com/document/280110
