Trading blocs are typically collections of nations in a certain area that coordinate and advance commerce. Since members are regarded favourably in comparison to non-members, trading blocs encourage trade formation between members and trade liberalisation (the release of trade from restrictive barriers). Additionally, a regional economic bloc is an association of nations that defends its members from imports from those outside the region. Also, trade blocs are governmental alliances of nations formed to advance intra-block commerce and protect its members from international competition. The top ten regional blocks in the world will be covered in this blog.
What are Regional Trading Blocs?
Trade blocs are associations of nations that create preferential trade agreements among their members. It is a collection of nations contained within a particular geographic area. Trade blocs are allowed by the World Trade Organization (WTO), but only if they result in less protection from foreign nations than there was before the trading bloc was formed. Preferential trade areas, free trade areas, customs unions, and common markets are the four different forms of trading blocs.
List of Top 10 Regional Trading Blocs in the world
The list below comprises ten major regional trading blocs in the world economy. These blocs consist of countries within a specific geographical boundary, which chose to cooperate with each other toward the goal of securing regional economic growth. Below is the list of 10 major regional trade blocs across the world.
Brazilian, Russian, Indian, Chinese, and South African economies make up the BRICS group. South Africa joined this organisation in 2010, however it was once known as BRIC before that. In 2017, the combined BRICS exports and imports totalled USD 2902 billion and USD 2339 billion, respectively. China, which accounted for 70% of BRICS exports and 65% of BRICS imports, is the greatest trading nation among these nations in terms of both imports and exports.
NAFTA – North America Free Trade Agreement
Canada, the United States, and Mexico are the three large members of NAFTA, which was created on January 1st, 1994. While Mexico offers more affordable resources, the USA and Canada offer a highly industrialised environment that supports the growth of industry and services. Eliminating economic obstacles among its member nations, fostering a free trade environment, and expanding investment opportunities are all responsibilities of NAFTA.
In 2017, NAFTA goods exports totalled USD 2376 billion and imports totalled USD 3262 billion. Among the NAFTA nations, the United States is the greatest trading partner.
CIS – Commonwealth of Independent States
Azerbaijan, Armenia, Russia, Ukraine, Kazakhstan, Belarus, Turkmenistan, Uzbekistan, Georgia, Moldova, Kyrgyzstan, and Tajikistan are all members of the CIS group, which was established in 1991. Data on international commerce shows that the CIS countries' share of global exports decreased from 3% in 2015 to 2.6% in 2016. Additionally, CIS nations supplied 2% of global imports in each of the two years.
The ASEAN Economic Community (AEC)
As the third-largest economy in Asia and the sixth-largest in the globe in 2019, the AEC is crucial to the integration of the Asian economies. On December 31, 2015, it was formally incorporated into the Association of Southeast Asian Nations (ASEAN) Community in an effort to better meld the ASEAN economies into a single market and manufacturing base. In order to accomplish this goal, the regional economic community works to implement Blueprint 2025, which aims to completely integrate the region into the global economy and make it highly competitive.
The Common Market of Eastern and Southern Africa (COMESA)
The largest regional economic association in Africa is COMESA. It was founded on December 8th, 1994, to take the place of the previous Preferential Trade Area (PTA), which had been started in 1981. The member nations of this commercial bloc work together to develop regional or international trade as well as their human and natural resources. The goal of this economic collaboration between COMESA member states is to advance security and peace for the local populace. In order to achieve this goal, the COMESA encourages regional integration, which led to the creation of a free trade area and the beginning of a customs union in 2009.
APEC – Asia Pacific Economic Cooperation
The member economies of APEC, which together account for around 60% of global GDP, were also referred to. It is in charge of promoting commerce, investment, cooperation, and economic development in this area. Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taipei, Thailand, United States, and Vietnam are among the 21 nations that make up APEC. In 2016, APEC's goods exports totalled USD 8021 billion and its imports totalled USD 7997 billion.
SAARC – South Asian Association for Regional Cooperation
South Asian nations' citizens have a forum through SAARC to collaborate in an environment of trust and understanding. It was established on December 8th, 1985, and currently counts Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan, and Sri Lanka among its members. In 2016, SAARC exported commodities worth USD 330 billion to the world and imported USD 481 billion. Among SAARC nations, India is the trade nation with the highest import and export volumes. Annual summits are held by SAARC, and the nation hosting the summit serves as the organisation's chair.
The Indian Ocean Rim Association (IORA)
The Indian Ocean region contributes significantly to the world economy and international trade because of its abundant natural resources, strategic location at the hub of the global oil trade, and rapidly expanding economies. The Indian Ocean Regional Association (IORA) was founded on March 6th, 1997 as a forum to promote regional collaboration. Its current emphasis areas include maritime safety and security, commerce and investment facilitation, fisheries management, catastrophe risk management, academic, science, and technological collaboration, as well as tourist and cultural interchange. The Blue Economy and women's economic empowerment are the other two focus areas of IORA.
The Southern African Development Community (SADC)
One of the eight established pillars for continental integration in Africa is the SADC. Intra-SADC commerce makes up a comparatively larger portion of the region's overall trade compared to trade between other African economic groups. Following the ratification of the South African Development Community's Declaration and Treaty, the SADC was officially founded on August 17, 1992. The Southern African Development Coordination Conference (SADCC), which was established in Lusaka, Zambia, in 1980, was the organisation that came before this bloc. The SADC began to concentrate especially on the integration of economic growth after transitioning into a development community.
The Southern Common Market, or MERCOSUR, was founded on March 26, 1991; its name is Mercado Comun del Cono Sur. It is a tariff union of South American nations that includes Uruguay, Brazil, Argentina, Venezuela, Paraguay, and Venezuela as part of its market. The nations of Bolivia, Chile, Colombia, Ecuador, and Peru are associate members. Its key objectives are to hasten sustained economic growth.
One of the trading blocs in the world with the highest growth is MERCOSUR. The two main tongues used in this area are Spanish and Portuguese. In 2017, MERCOSUR exported to the world for USD 292 billion and imported USD 237 billion.
Regional Trading Blocs – Benefits
The Benefits of having a Regional Trading Bloc are as follows −
Foreign Direct Investment- Foreign Direct Investment (FDI) TRBs experience a spike in FDI, and it improves the national economies of participants.
Economic of Sale- Larger markets are developed, which results in lower costs because of mass production. Production of goods closes to home. These markets create economies of scale economies.
Competition- Trade blocs entice manufacturers from other economies, which leads to
Increased rivalry Competition encourages efficiency among businesses.
Trade Effects- Trade Effects Import prices decrease as tariffs are lifted. Demand As times change, customers take control.
Market Efficiency – A combination of rising consumption, shifting demand, and a
A market that has more products is more effective.
Businesses Participation in Trade Blocs Globally
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