REGIONAL TRADING

AGREEMENTS (RTAs)
Topic-3
 RTAs- DEVELOPMENT
• - DURING 1948-94, GATT RECEIVED 124 NOTIFICATIONS OF
RTAs, RELATING TO TRADE IN GOODS
• - WTO IN 1995- RECEIVED OVER 130 ADDITIONAL
AGREEMENTS COVERING TRADE IN GOODS & SERVICES

• IMPORTANT: WTO MEMBERS HAVE TO INFORM , TO WHICH

RTA THEY ARE PARTICIPATING

• RTAs- ARE EXCEPTION TO WTO ARTICLE 14, WHERE TARIFF

AND OTHER TECHNICAL BARRIERS CAN BE REDUCED ON A
PREFERENTIAL BASIS BY THE COUNTRIES UNDER A
REGIONAL AGREEMENT
 CONCEPTUAL FRAMEWORK OF
INTERNATIONAL INTEGRATION
• TWO MAIN REASONS:

• 1.COMMON HISTORY/ CULTURE SHARING

• - CONSUMER TASTES LIKELY TO BE SIMILAR/
DISTRIBUTION CHANNEL EASY TO ESTABLISH

• 2.DISTANCES ARE SHORT

 MAJOR ASPECTS OF RTAs
• 1. TRADE CREATION : ie. GENERATION OF NEW MARKETS
FOR NEWER PRODUCTS & INCREASED TRADE FLOWS IN THE
EXISTING PRODUCT LINES

• 2. TRADE DIVERSION: SHIFT OF TRADE FROM THE MEMBER

PARTNER COUNTRIES TO MORE EFFICIENT NON-MEMBER
COUNTRIES
 MAJOR REGIONAL TRADING
BLOCKS
• APEC- ( ASIA PACIFIC ECONOMIC COOPERATION)
• -MEMBERS: USA, CANADA, JAPAN, RUSSIA, CHINA,
AUSTRALIA,NEWZEALAND, KOREA & OTHERS
• MOST DYNAMIC REGION
• ESTABLISHED IN 1989
• - AIM- TO STRENGTHEN THE ASIA- PACIFIC COMMUNITY
• ACCOUNT FOR 65% OF WORLD’S GDP( $19254BILLION)
• -2.6 BILLION PEOPLE
• -47 % OF WORLD’S TRADE
• THREE PILLARS:
• 1.TRADE & INVESTMENT LIBERALIZATION
• 2.BUSINESS FACILITATION
• 3. ECONOMIC & TECHNICAL COOPERATION
 NAFTA( NORTH AMERICAN
FREE TRADE AREA)
• - ESTABLISHED ON JAN1, 1994
• POPULATION- 360 MILLON
• - PURCHASING POWER- $6.5 TRILLION

• IMPORTANT MEMBERS: USA, CANADA ,& MEXICO

 EUROPEAN UNION(EU)
• MAASTRITCHT TREATY 1992

• FIRST PROPOSED BY FRENCH FOREIGN MINISTER,ROBERT

SCHUMAN ON 9 MAY 1950, ALSO KNOWN AS EUROPE’S DAY

• - INITIALLY EU CONSISTED OF JUST SIX MEMBERS-BELGIUM,

GERMANY, FRANCE, ITALY, LUXEMBOURG & THE
NETHERLANDS
• -1973- DENMARK, IRELAND & UK JOINED
• 1981-GREECE
• 1986-SPAIN & PORTUGAL
• 1995- AUSTRIA, FINLAND& SWEEDEN JINED
• 2004- 10 NEW COUNTRIES JOINED
 EU
• -ISSUES- NOT ONLY TRADE & ECONOMY BUT ALSO,
• CITIZEN’S RIGHTS- ENSURING FREEDOM, SECURITY & JUSTICE;
• REGIONAL DEVELOPMENT; ENVIRONMENTAL PROTECTION; &
PROMOTING GLOBALIZATION
• FIVE EU INSTITUTIONS:
• -EUROPEAN PARLIAMENT( ELECTED BY THE PEOPLES OF THE
MEMBER STATES)
• COUNCIL OF EUROPEAN UNION;( REPRESENTING GOVT OF
MEMBER STATES).
• EUROPEAN COMMISSION;
• COURT OF JUSTICE;
• COURT OF AUDITORS
 ASEAN
• - ESTABLISHED IN 1967 IN BANGKOK
• -POPULATION 500 MILLION
• AREA- 4.5 MILLION SQ. KM
• -COMBINED GDP $ 737 BILLION
• -TOTAL TRADE: $ 720 BILLION
 OTHER RTAs
• EAST ASIAN ECONMIC COUNCIL- CHINA, BRUNEI, HONGKONG,
KOREA, MALAYSIA, SINGAPORE, THAILAND ETC

• GULF COOPERATION COUNCIL(GCC)- 1981-BAHARAIN, QATAR, UAE,

OMAN- ALL FROM PERSIAN GULF

• - SAARC- SEVEN MEMBERS FROM SOUTH ASIA

• -COMMON MARKET FOR EASTERN & SOUTHERN AFRICA( COMESA)

• - ECONOMIC COMMUNITY OF WEST AFRICAN DEVELOPMENT
• SOUTH AFRICA N DEVELOPMENT COMMUNITY(SADC)
• MERCOSUR- IN 1881 BY BRAZIAL, ARGENTINA, PARAGUAY &
URUGUAY , ACCOUNT FOR 80% OF SOUTH AMERICA’S GDP,
• THIRD LARGEST BUSINESS AREA, $ 1 TRILLION COMBINED GDP.
POPULATION 220 MILLION- THEY IMPLEMENTED COMMON TARIFF
STRUCTURE RATES SINCE 1995