Regional Trade Agreements And Their Impact On Globalisation

2163 words - 9 pages

Economists are still unaware as to whether regional trade agreements and trade hinder or promote globalisation. Given that they can be inclusive or exclusive, offer reciprocal trade to other countries or set high tariff walls, it appears that many countries are seeking membership to avoid being the one left out. As the World Trade Organisation works towards achieving unilateral reductions in protection to maximise the benefits of trade, it seems that those countries that are gaining the most from international flows of goods are those who only trade with a select few.With the increasing trend towards a global economy, countries are now forced to be not only regionally competitive, but also internationally competitive. The reduction of protection barriers such as tariffs and subsidies is providing serious challenges for less efficient producers to compete in the global market place. In an effort to provide increased trading opportunities and as a way of encouraging product specialisation, many countries have established trade alliances, signed trade agreements or become a part of trading blocs. The World Trade Organisation (WTO) has actively encouraged such alliances and trade agreements, however, the WTO would see some trading blocs as anti competitive and are less inclined to favour these arrangements.The vast majority of WTO member countries are party to one or more regional trade agreements. The emergence of trade agreements has accelerated since the early 1990's, with some 250 regional agreements notified to the WTO up to the end of December 2002. There are over 170 regional trade agreements currently in force and an additional 70 are estimated to be operational although not yet notified. By the end of 2005, if regional trade agreement's reportedly planned or already under negotiation are concluded, the total number of regional trade agreements in force might well approach 300.The emergence of trade agreements and trading blocs can be directly attributed to the dawning realisation that we are all part of a global market place. Economies have become more integrated in recent years and have moved to target their most efficient industries as potential lucrative exporters. The result has been the formation of regional and global agreements that have allowed for expansion of industries and access to much larger markets.Free Trade Agreements (FTA's) are formal arrangements between countries that allows for greater trading opportunities without the barriers often in place between competing countries. Such agreements made between two or more countries aim to encourage a policy of non-intervention by governments in trade between the participating countries. Tarrif and trade barriers are usually removed or significantly lowered between participating countries, while countries retain their own commercial policies when trading with non-members of the agreement. Australia has a long-standing free trade agreement with New Zealand called the Closer Economic...

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