trading bloc

(noun)

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

Related Terms

Examples of trading bloc in the following topics:

  • Trade Blocs and Common Markets

    • A trade bloc is an agreement where regional barriers to trade are reduced or eliminated among the participating states.
    • The North American Free Trade Agreement (NAFTA) is an example of a formal trade bloc.
    • However, entering a trade bloc also strengthens ties between member parties.
    • For better or for worse, trade blocs are prevalent.
    • Since 1997, more than 50% of all world commerce was conducted under the auspices of regional trade blocs, such as NAFTA.

  • The North American Free Trade Agreement (NAFTA)

    • NAFTA is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
    • The North American Free Trade Agreement (NAFTA) is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
    • It superseded the Canada – United States Free Trade Agreement between the U.S. and Canada.
    • In terms of combined GDP of its members, the trade bloc is the largest in the world as of 2010.
    • --Canada trade was already duty free.

  • Trading blocs and agreements

    • Regional trading blocs represent a group of nations that join together and formally agree to reduce trade barriers among themselves.
    • NAFTA is such a bloc.
    • Such agreements are designed to facilitate trade through the establishment of a free trade area customs union or customs market.
    • Free trade areas and customs unions eliminate trade barriers between member countries while maintaining trade barriers with nonmember countries.
    • Trade agreements are becoming a growing force for trade liberalization; the development of such agreements provides for tremendous opportunities for US companies doing business in Latin America and North America.

  • The Common Market of the Southern Cone (MERCOSUR)

    • Intra-Mercosur merchandise trade (excluding Venezuela) grew from USD 10 billion at the inception of the trade bloc in 1991, to $88 billion in 2010; Brazil and Argentina accounted for 43% of this total.
    • The trade balance within the bloc has historically been tilted toward Brazil, which recorded an intra-Mercosur balance of over $5 billion in 2010.
    • Trade within Mercosur amounted to only 16% of the four countries' total merchandise trade in 2010, and trade with the European Union (20%), China (14%), and the United States (11%) was of comparable importance.
    • Exports from the bloc are highly diversified, and include a variety of agricultural, industrial, and energy goods.
    • It is the fourth-largest trading bloc after the European Union.

  • Political and Regulatory Environment

    • Political stability, trade blocs, tariffs, and expropriation are risks that should be evaluated prior to marketing in foreign countries.
    • Regional trading blocs represent a group of nations that join together and formally agree to reduce trade barriers among themselves.
    • Such agreements are designed to facilitate trade through the establishment of a free trade area, customs union or customs market.
    • Free trade areas and customs unions eliminate trade barriers between member countries while maintaining trade barriers with non-member countries.
    • There are, however, some governments that openly oppose free trade.

  • The International Monetary Structure

    • The international monetary structure involves international institutions, regional trading blocs, private players, and national governments.
    • The World Trade Organization settles trade disputes and negotiates international trade agreements in its rounds of talks (currently the Doha Round) .
    • For example, the Commonwealth of Independent States (CIS), the Eurozone, Mercosur, and North American Free Trade Agreement (NAFTA) are all examples of regional trade blocs, which are very important to the international monetary structure .
    • This map depicts the member states of the World Trade Organization (WTO).
    • NAFTA, a free trade area between Canada, the U.S., and Mexico, is an example of the importance of regional trade blocs to the international monetary structure.

  • Political Environment

    • Regional trading blocs represent groups of nations that join together and formally agree to reduce trade barriers among themselves.
    • NAFTA is such a bloc.
    • Such agreements are designed to facilitate trade through the establishment of a free trade area customs union or customs market.
    • This eliminates trade barriers between member countries while maintaining trade barriers with non-member countries.
    • These treaties together have worked to form the political and economic bloc known as the European Union.

  • Technological Barriers

    • Standards-related trade measures, known in WTO parlance as technical barriers to trade play a critical role in shaping global trade.
    • As tariff barriers to industrial and agricultural trade have fallen, standards-related measures of this kind have emerged as a key concern.
    • These standards-related trade measures, known in World Trade Organization (WTO) parlance as "technical barriers to trade," play a critical role in shaping the flow of global trade.
    • Most countries are now part of the World Trade Organization.
    • The European Union is its own bloc within the W.T.O.

  • The Cold War Begins

    • The Cold War began with the formation of the Eastern Bloc, as well as the implementation of the Marshall Plan and the Berlin Blockade.
    • The Eastern European territories liberated from the Nazis and occupied by the Soviet armed forces were added to the Eastern Bloc by converting them into satellite states.
    • Fearing American political, cultural and economic penetration, Stalin eventually forbade Soviet Eastern bloc countries from accepting Marshall Plan aid.
    • Stalin believed that economic integration with the West would allow Eastern Bloc countries to escape Soviet control, and that the US was trying to buy a pro-US re-alignment of Europe.
    • The Soviet Union's alternative to the Marshall plan, which was purported to involve Soviet subsidies and trade with eastern Europe, became known as the Molotov Plan.

  • The Asia-Pacific Economic Cooperation

    • APEC is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region.
    • Established in 1989 in response to the growing interdependence of Asia-Pacific economies and the advent of regional economic blocs (such as the European Union) in other parts of the world, APEC works to raise living standards and education levels through sustainable economic growth and to foster a sense of community and an appreciation of shared interests among Asia-Pacific countries.
    • Since 2006, the APEC Business Advisory Council, promoting the theory that a free trade area has the best chance of converging the member nations and ensuring stable economic growth under free trade, has lobbied for the creation of a high-level task force to study and develop a plan for a free trade area.
    • The proposal for a FTAAP arose due to the lack of progress in the Doha round of World Trade Organization negotiations, and as a way to overcome the "spaghetti bowl" effect created by overlapping and conflicting elements of the umpteen free trade agreements.
    • Explain the role The Asia-Pacific Economic Cooperation (APEC ) plays in ensuring free trade