Role of Trading Blocs

Topics: Trade bloc, International trade, European Union Pages: 3 (838 words) Published: November 9, 2010
The role and function of regional trade blocs
What are regional trading blocs?
Regional trade blocs are intergovernmental associations that manage and promote trade activities for specific regions of the world. Trade bloc activities have political as well as economic implications. For example, the European Union, the world’s largest trading block, has “harbored political ambitions extending far beyond the free trading arrangements sought by other multistage regional economic organizations“ (Gibb and Michalak 1994: 75). Indeed, the ideological foundations that gave birth to the EU were based on ensuring development and maintaining international stability, i.e., the containment of communist expansion in post World War II Europe (Hunt 1989). The Maastricht Treaty which gave birth to the EU in 1992 included considerations for joint policies in regard to military defense and citizenship.

The decisions reached by development policy makers on whether regionalism or globalized trade should be pursued may influence a country’s earnings from trade. Regionalism differs from globalization in the size and area of markets. From the perspective of developing countries skeptical of free trade, regional trade blocs offer some form of protection against an aggressive global market. Four major trade blocs

Some well known trading blocs include the EU (European Union; see Map 1), NAFTA (North American Free Trade Agreement; see Map 2), MERCOSUR (Mercado Comun del Cono Sur, also known as Southern Common Markets (SCCM); see Map 3), and ASEAN (Association of Southeast Asian Nations; see Map 4). The following maps show trade data for 2001 (UNCTAD 2002). The series of pie charts display the export composition of trade from each country in the bloc.

General debates on trade blocs
The debates surrounding the feasibility of regionalism contain sharp disagreements. Gibb and Michalak note, “the multilateral trading system is in decline and regionalism is on the ascendancy” (Gibb and...
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