Are regional integration arrangements

“Building blocks, or stumbling blocks”

VAISHALI SHARMA
 Multilateral trade liberalization:

- Within GATT/WTO, each member country makes tariff

concessions on a quid pro quo basis (reciprocity)

- Any concession made to one member is automatically

extended to all other members (non-discrimination)

- It works politically
 Regional/bilateral trade agreements:

- Trade liberalization on a discriminatory basis, i.e.,

concessions only made between parties to agreement

- Free trade areas (NAFTA) or customs unions (EU)

- In conflict with principle of non-discrimination in GATT/WTO

Article 1, but allowed under Article 24 if tariffs are reduced for
“substantially all trade” between parties
 Regionalism, by allowing  Multilateralism, we had better
stronger internalization of the work out what it means and, if
gains from trade liberalization, it means different things to
seems likely to facilitate freer different people, make sure to
trade when it is initially highly
restricted. identify the sense in which we
are using the term.
 Sector-specific lobbies are a
danger if regionalism is
permitted because they tend
to stop blocs from moving all
the way to global free trade. In
the presence of lobbies, trade
diversion is good politics even
if it is bad economics.
Association of Southeast Asian Nations

 Established on 8 August 1967 in Bangkok five original

Member Countries

 Indonesia
 Malaysia
 Philippines
 Singapore
 Thailand
 Brunei, Cambodia, Laos, Myanmar, and Vietnam (NEW
MEMBERS)
Objective

 Accelerate economic growth, social progress and cultural

development in the region.

 Promote regional peace and stability through abiding respect

for justice and the rule of law in the relationship among
countries in the region.

 Adoption of the agreement on the ASEAN Free Trade Area

(AFTA) in 1992

Outward looking, Living in peace, Stability and prosperity,

Bonded together in partnership in dynamic development
Food, agriculture and forestry.
Three Pillars of ASEAN

 ASEAN Security Community

 Countries in the region live at peace with one another and
with the world in a just, democratic and harmonious
environment.
 ASEAN Economic Community
 Create a stable, prosperous and highly competitive
ASEAN economic region in which there is a free flow of
goods, services, investment and a freer flow of capital,
equitable economic development and reduced poverty
and socio-economic disparities in year 2020.

 ASEAN Socio-Cultural Community

 Foster cooperation in social development aimed at raising
the standard of living of disadvantaged groups and the
rural population
European Union
EU
 The European Union (EU) is an economic and political
union of 27 member states, located primarily in Europe.

 Single currency is in use between the 16 members of the

Eurozone.

 The EU generated an estimated nominal GDP of

US$16.83 trillion in 2007 (amounting to 31% of the world's
total economic output)
MEMBER COUNTRIES

 Austria  Latvia
 Belgium  Lithuania
 Bulgaria  Luxembourg
 Cyprus  Malta
 Czech Republic Denmark  Netherlands
 Estonia  Poland
 Finland  Portugal
 France  Romania
 Germany  Slovakia
 Greece  Slovenia
 Hungary  Spain
 Ireland  Sweden
 Italy  United Kingdom of Great
Britain
 Northern Ireland
Principal Objects of the EU

 Establish European Citizenship

 Ensure freedom, security, and justice

 Promote economic and social progress

 Assert Europe’s role in the world

The EU is run by five institutions, each
playing a specific role:
 European Parliament
 elected by the peoples of the Member States

 Council of the Union

 composed of the governments of the Member States

 European Commission

 driving force and executive body

 Court of Justice
 compliance with the law

 Court of Auditors
 sound and lawful management of the EU budget
North American Free Trade Agreement
(NAFTA)
 NAFTA
Signed by the three Governments on 17 December 1992

• Implemented on January 1, 1994.

• Trade-liberalization agreement among members viz.

• United States, Canada, and Mexico

• Progressively eliminates most tariff and non-tariff barriers to trade

between these countries

• Facilitates cross-border investment,

• Cooperation regarding the environment and labor.

NAFTA

 Structured as three bilateral agreements,

 One between Canada and the United States,

 Second between Mexico and the United States,

 Third between Canada and Mexico.

Benefits of NAFTA

 Dismantling trade barriers = market integration

 Canada is # 1 U.S. export market

 Mexico is # 2 U.S. export market

 U.S. is #1 export market for both Canada and

Mexico
NAFTA pros/cons

 Jobs created
 Most under developed  Benefits Mexico more then
countries gain the most the U.S
 Tariffs reduced
 Goods and services at  U.S deficit with trading
lower rates partners
 Mexico has opened its
financial sector to  Loss of low wage
companies from US and American jobs to Mexico
Canada removed all
restrictions by 2007
 Environmental problems
 Mexico economy growing
again
South Asian Association for Regional
Cooperation
Bangladesh, Bhutan, India, Maldives Nepal, Pakistan,
Sri Lanka
South Asian Association for Regional

Cooperation

 Formally came into existence in 1985 with the adoption of its

Charter at the first Summit in Dhaka (7- 8 December 1985).

 Seven South Asian countries of Bangladesh, Bhutan, India,

the Maldives, Nepal, Pakistan and Sri Lanka

 Strengthen their competitive position

Areas of Cooperation

 Agriculture

 Rural development

 Telecommunications

 Health and population services

 Identify other areas of possible cooperation

MEMBER COUNTRIES

 India
 Nepal
 Pakistan
 Bangladesh
 Bhutan
 Maldives
 Nepal.
Objective
 Acceleration of economic growth,

 Social progress and cultural development in the region,

 Promotion of active collaboration and mutual assistance in

the economic, social, cultural, technical and scientific fields
and

 Strengthening of cooperation among the Member States in

international forum on matters of common interest
The SAARC Secretariat

 Established in Kathmandu on 16 January 1987.

 Coordinate and monitor the implementation of SAARC

activities, service the meetings of the Association and serve
as the channel of communication between SAARC and other
international organizations

 Comprises the Secretary General, seven Directors and the

General Services Staff.
 Agriculture and Rural Development Division

 Environment and Science and Technology Division


 Economic, Trade and Finance Division

 Social Affairs Division

 Information and Publications Division

 Energy, Tourism Division

 Human Resource Development, Transport and Treaty

Division
SAPTA (South Asian Preferential Trade Arrangement)

 In December 1991, the Sixth Summit held in Colombo member

countries agreed to formulate an agreement to establish a SAARC
Preferential Arrangement (SAPTA) by 1997.

 Agreement on SAPTA was signed on 11 April 1993 and entered into

force on 7 December 1995

 Deals with Tariffs, Non-Tariff Measures and Direct Trade Measures

PREFENTIAL TARIFF BASIS
Country Products Depth of concessions

Bangladesh 572 10% -15%

Bhutan 266 10-20%

India 2402 10-100%

Maldives 390 5-15%

Nepal 425 10-15%

Pakistan 685 10-30%

Sri Lanka 211` 10-75%

TOTAL 4951
SAFTA

 SAFTA came into effect on 1 January 2006, with the aim of

reducing tariffs for intraregional trade among the seven
SAARC members. Pakistan and India are to complete
implementation by 2012, Sri Lanka by 2013 and Bangladesh,
Bhutan, Maldives and Nepal by 2015.

 It replaces the earlier South Asia Preferential Trade

Agreement (SAPTA) and may eventually lead to a full-
fledged South Asia Economic Union.