Over the course of sixty years, the European Union (EU) has evolved to become one of the most economically and politically integrated regions in the world. Compare and contrast the EU with one other major global trading bloc, such as NAFTA or ASEAN, with which you are familiar.
Regional trade agreements have been prevalent since the early 1990s. A Regional trade agreement removes all barriers to trade and foreign investment, which means that poor economies are not allowed to use import tariffs to protect their growing industries or their farmers from floods of cheap imports. Free trade agreements also include additional rules on investment that pose a prospective threat to poor people’s access to public services. This clearly states that even though poor countries have the advantage of strength in numbers as compared to the rich economies and countries, the former are more likely to be pushed into accepting unreasonable demands of the richer economies. Therefore, it can be analyzed that a Regional Trade Agreement between equal partners can prove to be beneficial for both, but such an agreement between unequal partners ( rich and a poor economy) shall probably prove to be beneficial for the stronger economy.
In the 21st century, the European Union has realized the importance of changes and advancements in their trade policies, where they need to become more advance and faster in economic policies to compete with rest of the world and stay ahead of them, due to which, they have introduced Free Trade Agreements (FTA’s) especially with emerging markets such as Asia to promote more bilateral trade and business. The stages in regional trade agreement are as follows:
A customs union is a type of an inter-govermental agreement which is composed of a free trade area with a common external tariff. Even though, participant countries have different import quotas, they have common external policies. Custom Unions are usually established to create closer political and cultural ties between the member countries.
A Free Trade Agreement is a pact between nations to create a free trade zone where movement of goods and services across borders can be allowed without any low or no implication of tariffs and quotas. A set up where the market defines who would be the purchasers and producers of some commodities and services is a Free Trade Setup. This means that countries manufacture what they are good at a less cost and purchase/import those commodities which those countries are good at manufacturing at a lower cost. This concept focusses on unobstructed movement of import/export.
An economic union is a type of an inter- governmental agreement which is comprises of both, a common market and a customs union. The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production like capital and labor along with a common external trade...