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| Source - EH |
Recently every country has aimed to develop and maintain global relations with the leaders of other countries. Each trade bloc has different aims and objectives some were based on security like NATO (North Atlantic Treaty Organisation), some for promoting national liberalization movements (Organization of African Unity, OAU), and some others were economic cartels (Organization of Petroleum Exporting Countries, OPEC).
Regional blocks protect their own member countries against global competition. They work as defense mechanisms against taxes, import quotas, and tariffs and to get government subsidies. Trading blocks are a special type of integration.
Objectives
- Promoting free transfers of labor, capital, and other factors of production.
- Maintaining better relations
- Imposing barriers on non-member countries
- Creating one currency for exchange and central bank o Collective bargaining
- Assisting member countries
- Enhancing the welfare of consumers
- Promoting higher unemployment
- Reducing trade barriers for member countries
- Generating competition
BENEFITS OF REGIONAL TRADE BLOCKS
Promoting trade and economic growth:
Market access is easily possible in member countries for trade. It leads to the growth of the economy as a new work culture, new
technology, foreign direct investments, employment, and many more things. Due to FTA, helps lower the restrictions, and other facilities such as infrastructure are also provided. It appears after 1990 the FTA brought a boom in the market.
Regional integration and competitiveness:
The regional trade blocks provide integration among the countries which helps the country in providing benefits to the consumers. The competition among blocks which helps each other as they would be able to develop substitute products however, this helps in developing a different product and market. This will create competition among non-member countries.
Trade effects:
Due to certain policies, the tariffs will be reduced as this will lead to a reduction in price which will affect the demand in the market. As this will automatically benefit the consumers. Even FDI has the same effect.
Market efficiency:
The changes in demand will result in the production of the commodities which leads to efficiency in the market. It will contribute to the economic growth of the country.
CRITICS
Interdependence:
o The countries within the bloc become so interdependent that natural disasters, new economic policies, or other calamities in one country can impact the economies of the others.
Concessions:
The regional trade bloc countries have to let non-member firms gain domestic markets after levying the taxes. Countries that join the regional bloc have to make certain concessions.
Loss of sovereignty:
A trading bloc, when it becomes a political union, leads to a partial loss of sovereignty.
Regionalism:
The regional trade blocs give benefits to their member countries. These economies establish tariffs and quotas that protect intra regional trade from outside forces. Rather than WTO, regional trade bloc participates in countries.
Due to certain policies, the tariffs will be reduced as this will lead to a reduction in price which will affect the demand in the market. As this will automatically benefit the consumers. Even FDI has the same effect.
Market efficiency:
The changes in demand will result in the production of the commodities which leads to efficiency in the market. It will contribute to the economic growth of the country.
CRITICS
Interdependence:
o The countries within the bloc become so interdependent that natural disasters, new economic policies, or other calamities in one country can impact the economies of the others.
Concessions:
The regional trade bloc countries have to let non-member firms gain domestic markets after levying the taxes. Countries that join the regional bloc have to make certain concessions.
Loss of sovereignty:
A trading bloc, when it becomes a political union, leads to a partial loss of sovereignty.
Regionalism:
The regional trade blocs give benefits to their member countries. These economies establish tariffs and quotas that protect intra regional trade from outside forces. Rather than WTO, regional trade bloc participates in countries.
Written by - Sakhi Alimchandani
This article has been authored exclusively by the writer and is being presented on Eat My News, which serves as a platform for the community to voice their perspectives. As an entity, Eat My News cannot be held liable for the content or its accuracy. The views expressed in this article solely pertain to the author or writer. For further queries about the article or its content you can contact on this email address - anushka.author16@gmail.com
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