3.5. Regional Trade Blocs and World Trade Organisation (WTO)
In1948, to liberalise the world from high customs tariffs and various other types of restrictions, General Agreement for Tariffs and Trade (GATT) was formed by some countries. In 1994, it was decided by the member countries to set up a permanent institution for looking after the promotion of free and fair trade amongst nation and the GATT was transformed into the World Trade Organisation from 1st January 1995.
WTO is the only international organisation dealing with the global rules of trade between nations. It sets the rules for the global trading system and resolves disputes between its member nations. WTO also covers trade in services, such as telecommunication and banking, and others issues such as intellectual rights.
Regional Trade Blocs have come up in order to encourage trade between countries with geographical proximity, similarity and complementarities in trading items and to curb restrictions on trade of the developing world. Today, 120 regional trade blocs generate 52 per cent of the world trade. These trading blocs developed as a response to the failure of the global organisations to speed up intra-regional trade. Though, these regional blocs remove trade tariffs within the member nations and encourage free trade, in the future it could get increasingly difficult for free trade to take place between different trading blocs.
Major Regional Trade Blocs
Regional Blocs | Head Quarters | Member Nations | Origin | Commodities | Other areas of co-operation |
ASEAN | Jakarta, | Brunei, | Aug, | Agro products, rubber, | Accelerate |
(Association of | Indonesia | Indonesia, | 1967 | palm oil, rice, copra, | economic |
South East Asian | Malaysia, | coffee, minerals – | growth, | ||
Nations) | Singapore, | copper, coal, nickel and | Cultural | ||
Thailand, | tungsten; Energy | development, | |||
Vietnam, | – petroleum and | Peace and | |||
Philippines, | natural gas and | regional | |||
Myanmar, | Software products | stability | |||
Cambodia, Laos |
CIS | Minsk, | Armenia, | - | Crude oil, natural | Integration | |
(Commonwealth | Belarus | Azerbaijan, | gas, gold, cotton, | and | ||
of Independent | Belarus, | fibre, aluminium | cooperation on | |||
States) | Georgia, | matters of | ||||
Kazakhstan, | economics, | |||||
Kyrgyzstan, | defence and | |||||
Moldova, | foreign policy | |||||
Russia, | ||||||
Tajikistan, | ||||||
Turkmenistan, | ||||||
Ukraine and | ||||||
Uzbekistan. | ||||||
EU | Brussels, | Austria, | EEC | - | Agro products, | Single market |
(European | Belgium | Belgium, | March | minerals, | with single | |
Union) | Denmark, | 1957 | chemicals, wood, | currency | ||
France, | EU | - | paper, transport | |||
Finland, | Feb. | vehicles, optical | ||||
Ireland, | Italy, | 1992 | instruments, | |||
the | clocks - works of | |||||
Netherlands, | art, antiques | |||||
Luxemburg, | ||||||
Portugal, | ||||||
Spain, | ||||||
Sweden | and | |||||
U.K. | ||||||
LAIA | Montevideo, | Argentina, | 1960 | - | - | |
(Latin American | Uruguay | Bolivia, | ||||
Integration | Brazil, | |||||
Association) | Columbia, | |||||
Ecuador, | ||||||
Mexico, | ||||||
Paraguay, | ||||||
Peru, | ||||||
Uruguay and | ||||||
Venezuela | ||||||
NAFTA | U.S.A., Canada | 1994 | Agro products, | - | ||
(North American | and Mexico | motor vehicles, | ||||
Free Trade | automotive parts, | |||||
Association) | computers, | |||||
textiles | ||||||
OPEC | Vienna, | Algeria, | 1949 | Crude petroleum | Coordinate | |
(Organisation of | Austria | Indonesia, | and unify | |||
Petroleum | Iran, | petroleum | ||||
Exporting | Iraq, Kuwait, | policies | ||||
Countries) | Libya, Nigeria, | |||||
Qatar, Saudi | ||||||
Arabia, U.A.E. | ||||||
and Venezuela | ||||||
SAFTA | Bangladesh, | Jan- | - | Reduce tariffs | ||
(South Asian | Maldives, | 2006 | on | |||
Free Trade | Bhutan, | interregional | ||||
Agreement) | Nepal, India, | trade | ||||
Pakistan | and | |||||
Sri | ||||||
Lanka | ||||||
3.6. Balance of Trade
Balance of Trade includes all transactions in goods and services including international aid and investments appearing in the current account of a country. By balances of trade we are able to compare the import-export of goods and services into a country. When the value of exported goods of a country exceeds the value of imported goods, it is called positive balance of trade. Contrary to this, if the value of imported goods exceeds the value of exported goods, it is called negative trade balance.
