Influence of International Organisations and Contemporary Trading Blocs and Agreements in Promoting Globalisation

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Economics Essay
Discuss the influence of international organisations and contemporary trading blocs and agreements in promoting globalisation.|

Throughout the recent decades, international organisations, trading blocs and agreements such as the European Union (EU), Asia-Pacific Economic Corporation (APEC), North American Free Trade Agreement (NAFTA) and Association of South-East Asian Nations (ASEAN) have influenced the promotion of globalisation throughout economies. The positive and negative outcomes of the influence of international organisations, contemporary trading blocs and agreements in promoting globalisation are outlined. Trading bloc occurs when a number of countries join together in a formal preferential trading agreement to the exclusion of other countries, such as the EU and NAFTA. As global trade has grown and as more economies form trading blocs – countries in recent years have moved to form agreements and trading alliances to ensure that they are in the best position to gain from growing trade opportunities and also to avoid being excluded from the emerging trading blocs. The promotion of the advantages of joining emerging trading blocs would place countries excluded from trading blocs and agreements at a disadvantage. Trade agreements can be bilateral (involving two countries – like Closer Economic Relations Trade Agreement, CERTA between Australia and New Zealand) or multilateral/regional (occurring on a regional basis – like NAFTA), or global (World Trade Organisation). Trade Agreements promote free trade exclusively amongst members or can be open to all nations. Free trade agreements are formal agreements between countries designed to break down barriers to trade between those nations. While these agreements are generally described as free trade agreements, in context it is more accurate to call them preferential trade agreements because in effect, they give more favourable access to goods and services from one nation or a group of nations part of the trade agreement compared to another. A negative effect of a preferential trade agreement is that they can make it harder for nations outside the preferential trade agreement to trade with the countries who are part of the agreement. In this respect, they may not create better conditions for global free trade at all. In contrast, global free trade agreements conducted through the World Trade Organisation (WTO) are designed to break down all global trade restrictions and free up world trade. Advantages and disadvantages through the growing influence of trading blocs and trade agreements in the global economy have increased through the free trade between countries part of trading blocs/agreements and the increased barrier between countries part of a trading bloc/agreement and ones not part of it. The outlined disadvantages of trade agreements are arguable as although two-thirds of European trade occurs within the EU (being a more closed trading bloc due to its protectionist policies), ASEAN economies primarily trade with countries outside their region, reflecting the fact that they are smaller economies and their economic growth strategies have centred around exports to industrialised economies. These regional and bilateral trade agreements which have often led to the formation of trading blocs can hinder the progress they were created for towards global free trade as agreements have proved to slice the world up into separate trade areas. This is arguable as trade agreements have also been referred by economists to be “stepping stones” towards global free trade as it initially convinces economies part of agreements to reduce their protectionist barriers against a smaller group of economies (part of the agreement) but eventually encouraging them to remove those barriers for the whole world. In recent years, economies part of NAFTA and ASEAN agreements have substantially increased the level of trade amongst themselves, compared to trade outside their...
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