Trade bloc

A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.

Trade blocs can be stand-alone agreements between several states (such as the USMCA) or part of a regional organization (such as the European Union). Depending on the level of economic integration, trade blocs can be classified as preferential trading areas, free-trade areas, customs unions, common markets, or economic and monetary unions.Mansfield and Milner 2005, 333.

Use

Historic trading blocs include the Hanseatic League, a Northern European economic alliance between the 12th and 17th centuries, and the German Customs Union, formed on the basis of the German Confederation and subsequently the German Empire from 1871. Surges of trade bloc formation occurred in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism. By 1997, more than 50% of all international commerce was conducted within regional trade blocs.Milner 2002, 450. Economist Jeffrey J. Schott of the Peterson Institute for International Economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNI, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization.Schott 1991, 2.

Some advocates of global free trade are opposed to trading blocs. Trade blocs are seen by them to encourage regional free trade at the expense of global free trade.O'Loughlin and Anselin 1996, 136. Those who advocate for it claim that global free trade is in the interest of every country, as it would create more opportunities to turn local resources into goods and services that are both currently in demand and will be in demand in the future by consumers. However, scholars and economists continue to debate whether regional trade blocs fragment the global economy or encourage the extension of the existing global multilateral trading system.Milner 2002, 458.Mansfield and Milner 2005, 330.

Terminology A common market is seen as a stage of economic integration towards an economic union or possibly towards the goal of a unified market.

A single market is a type of trade bloc in which most trade barriers have been removed (for goods) with some common policies on product regulation, and freedom of movement of the factors of production (capital and labour) and of enterprise and services.

Statistics

Trade blocPopulationGross domestic productMembers20062007growthper capita Economic and monetary unions EMU324,879,19510,685,946,928,31012,225,304,229,68614.41%37,630 OECS (sovereign states)593,9053,752,679,5623,998,281,7316.54%6,732 OII504,47612,264,278,32914,165,953,20015.51%28,081 CCCM6,418,41739,616,485,62343,967,600,76510.98%6,850 Customs and monetary unions CEMAC39,278,64551,265,460,68558,519,380,75514.15%1,490 UEMOA90,299,94550,395,629,49458,453,871,28315.99%647 Customs unions CAN96,924,486281,269,141,372334,172,968,64818.81%3,448 EAC127,107,83849,882,030,44361,345,180,04122.98%483 EUCU574,602,74515,331,827,900,20217,679,376,474,71915.31%30,768 GCC36,154,528724,460,151,595802,641,302,47710.79%22,200 MERCOSUR271,304,9461,517,510,000,0001,886,817,000,00012.44%9,757 SACU58,000,0001,499,811,549,1871,848,337,158,28123.24%6,885 Preferential trade areas and Free trade areas AANZFTA-ASEAN+32,085,858,84110,216,029,899,76411,323,947,181,80410.84%5,429 ALADI499,807,6622,823,198,095,1313,292,088,771,48016.61%6,587 AFTZ553,915,405643,541,709,413739,927,625,27314.98%1,336 APTA2,714,464,0274,868,614,302,7445,828,692,637,76419.72%2,147 CARIFORUM-EUCU-OCTs592,083,95015,437,771,092,52217,798,283,524,96115.29%30,060 CACM37,388,06387,209,524,88997,718,800,79412.05%2,614 CEFTA27,968,711110,263,802,023135,404,501,03122.80%4,841 CISFTA272,897,8341,271,909,586,0181,661,429,920,72130.62%6,088 DR-CAFTA-US356,964,47713,345,469,865,03714,008,686,684,0894.97%39,244 ECOWAS283,096,250215,999,071,943255,784,634,12818.42%904 EEA (EU + EFTA) 499,620,52114,924,076,504,59217,186,876,431,70915.16%34,400 EFTA-SACU68,199,9911,021,509,931,9181,139,385,636,88811.54%16,707 EAEC207,033,9901,125,634,333,1171,465,256,182,49830.17%7,077 USMCA449,227,67215,337,094,304,21816,189,097,801,3185.56%36,038 TPP25,639,622401,810,366,865468,101,167,29416.50%18,257 SAARC1,567,187,3731,162,684,650,5441,428,392,756,31222.85%911 SPARTECA35,079,659918,557,785,0311,102,745,750,17220.05%31,435 Pacific Alliance218,649,1151,371,197,216,1401,525,825,175,04511.28%6,978+This list is based on the data obtained from Statistics Division.

Comparison between regional trade blocs

ActivitiesRegional bloc Free Trade Area Economic and monetary union Free Travel Political pact Defence pact Other Customs union Single market Currency union Visa-free Border-less EU in force in force7 in force2 in force1 in force in force (Schengen1, 7, NPU and CTA1) in force in force (CFSP/ESDP1) ESA1, 7 EFTA in force in force2, 7 in force in force1, 7 in force1, 7 ESA1, 7 CARICOM in force in force in force 1 in force1 and proposed common in force1 proposed proposed NWFZ AU ECOWAS in force1, 3 in force1 proposed in force1 andproposed for 20121 andproposed common in force1 proposed proposed in force NWFZ1 ECCAS in force1 African Continental Free Trade Agreement (AfCFTA)1 in force1 proposed in force1 in force in force NWFZ1 EAC in force in force proposed for 2020s proposed for 2024 proposed ? proposed for 2023 NWFZ1 SADC in force1 in force1 proposed for 2015 de facto in force1 and proposed common for 2016 proposed NWFZ1 COMESA in force1 proposed for 2010 ? proposed for 2018 NWFZ1 Commonin force1 proposed for 2019 proposed for 2023 proposed for 2028 proposed for 2028 NWFZ1 Pacific Alliance in force in force NWFZ USAN MERCOSUR in force in force proposed for 2015 in force proposed for 2014 NWFZ CAN in force in force1 proposed1Twelfth Andean Presidential Council Act of Lima in force NWFZ Common proposed for 20144 proposed for not after 2019 proposed for 2019 proposed for 2019 in force proposed for 2019 proposed in force NWFZ EEU in force in force1 in force proposed in force in force1 AL GCC in force in force proposed proposed1 in force in force Common in force1 proposed for 2015 proposed for 2020 proposed proposedYemen Proposes Replacing Arab League With Arab Union, Agence France-Presse, 11 February 2004 ASEAN in force5 proposed for 2015 proposed8in force proposed for 2015 proposed for 2020 NWFZ CAIS in force1 proposed ? in force1 in force1 proposed NWFZ CEFTA in force RCC7 USMCA in force in force 1 in force1, 7 SAARC in force1, 6 proposed proposed in force9 PIF proposed for 20211 NWFZ1 1 not all members participating2 involving goods, services, telecommunications, transport (full liberalisation of railways from 2012), energy (full liberalisation from 2007)3 telecommunications, transport and energy - proposed4 sensitive goods to be covered from 2019 5 least developed members to join from 20126 least developed members to join from 2017 7 Additionally some non member states also participate (the European Union, EFTA have overlapping membership and various common initiatives regarding the European integration).8 Additionally some non member states also participate (ASEAN Plus Three)9 Limited to "entitled persons" and duration of one year.

Lists of trade blocs

List of preferential trade areas Lists of free trade agreements List of bilateral free trade agreements List of multilateral free trade agreements List of customs unions List of common markets List of economic unions List of monetary unions List of customs and monetary unions List of economic and monetary unions

Trade bloc

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