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A trade bloc is a type of intergovernmental agreement, often part of a regional
intergovernmental organization An intergovernmental organization (IGO) is an organization composed primarily of sovereign states (referred to as ''member states''), or of other organizations through formal treaties for handling/serving common interests and governed by interna ...
, where barriers to trade (
tariff A tariff is a imposed by a of a country or of a on or of goods. Besides being a source of for the government, import duties can also be a form of regulation of and policy that taxes foreign products to encourage or safeguard domestic indu ...
s and others) are reduced or eliminated among the participating states. Trade blocs can be stand-alone agreements between several states (such as the
North American Free Trade Agreement The North American Free Trade Agreement (NAFTA; es, Tratado de Libre Comercio de América del Norte, TLCAN; french: Accord de libre-échange nord-américain, ALÉNA) was an agreement signed by Canada Canada is a country in the north ...
) or part of a
regional organization and Turkey Turkey ( tr, Türkiye ), officially the Republic of Turkey, is a country straddling Southeastern Europe and Western Asia. It shares borders with Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is ...
(such as the
European Union The European Union (EU) is a political and economic union of that are located primarily in . The union has a total area of and an estimated total population of about 447million. has been established through a standardised that apply in ...

European Union
). Depending on the level of
economic integration Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff A tariff is a tax imposed by a government A government is the system or group of people governing a ...
, trade blocs can be classified as preferential trading areas,
free-trade area A free-trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and ...
s,
customs union A customs union is generally defined as a type of trade bloc A trade bloc is a type of trade pact, intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and Non-tariff barriers to tr ...

customs union
s, common markets, or
economic and monetary union An economic and monetary union (EMU) is a type of trade bloc A trade bloc is a type of trade pact, intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and Non-tariff barriers to tr ...
s.


Lists of trade blocs

* List of preferential trade areas * List of free trade areas (
bilateral Bilateral may refer to any concept including two sides, in particular: *Bilateria, bilateral animals *Bilateralism, the political and cultural relations between two states *Bilateral, occurring on both sides of an organism (Anatomical terms of loc ...
, multilateral) *
List of customs unions A customs union is generally defined as a type of trade bloc A trade bloc is a type of trade pact, intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and Non-tariff barriers to tr ...
* List of common markets * List of economic unions * List of monetary unions * List of customs and monetary unions * List of economic and monetary unions Currency union.PNG, Customs Unions World.svg,
Customs unions A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.GATTArticle 24 s. 8 (a) Customs unions are established through trade pacts where the participant countries set up co ...

Customs unions
worldwide Free Trade Areas.PNG, Free trade areas worldwide Mercosur - Member states.png,
Mercosur Mercosur (in Spanish), Mercosul (in Portuguese), or Ñemby Ñemuha (in Guarani), officially Southern Common Market,, pt, link=no, Mercado Comum do Sul, gn, link=no, Ñemby Ñemuha is a South American South America is a continent ...

Mercosur


Use

Historic trading blocs include the
Hanseatic League The Hanseatic League (; gml, Hanse, , ; german: label=German language, Modern German, Deutsche Hanse; nl, label=Dutch language, Dutch, De Hanze; la, Hansa Teutonica) was a Middle Ages, medieval commercial and defensive confederation of merchan ...
, a Northern European economic alliance between the 12th and 17th centuries, and the
German Customs Union The ''Zollverein'' (), or German Customs Union, was a coalition of Germany, German states formed to manage tariffs and economic policies within their territories. Organized by the 1833 ''Zollverein'' treaties, it formally started on 1 January 18 ...

German Customs Union
, formed on the basis of the
German Confederation The German Confederation (german: Deutscher Bund) was an association of 39 predominantly German-speaking sovereign states in Central Europe Central Europe is an area of Europe between Western Europe and Eastern Europe, based on a common Histo ...

German Confederation
and subsequently the
German Empire The German Empire or the Imperial State of Germany,, officially '.Herbert Tuttle Herbert Tuttle (1846–1894) was an American historian. Biography Herbert Tuttle was born in Bennington, Vermont Bennington is a New England town, town ...
from 1871. Surges of trade bloc formation occurred in the 1960s and 1970s, as well as in the 1990s after the
collapse of Communism Collapse or its variants may refer to: Concepts * Collapse (structural) * Collapse (topology), a mathematical concept * Collapsing manifold * Collapse, the action of collapsing or Telescoping (mechanics), telescoping objects * Collapsing user i ...
. By 1997, more than 50% of all world commerce was conducted within regional trade blocs.
Economist An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , pl ...

Economist
Jeffrey J. Schott of the
Peterson Institute for International Economics The Peterson Institute for International Economics (PIIE), previously known as the Institute for International Economics (IIE), is an American think tank A think tank, or policy institute, is a research institute A research institute, research ...
notes that members of successful trade blocs usually share four common traits: similar levels of per capita
GNP The Gross National Income (GNI), previously known as Gross National Product (GNP), is the total domestic and foreign output claimed by residents of a country, consisting of Gross Domestic Product ( GDP), plus factor incomes earned by foreign ...
, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization. Some advocates of global
free trade Free trade is a trade policy A commercial policy (also referred to as a trade policy or international trade policy) is a government's policy governing international trade International trade is the exchange of capital, goods, and service ...
are opposed to trading blocs. Trade blocs are seen by them to encourage regional free trade at the expense of global free trade. Those who advocate for it claim that global free trade is in the interest of every country, as it would create more opportunities to turn local resources into goods and services that are both currently in demand and will be in demand in the future by consumers. However, scholars and economists continue to debate whether regional trade blocs fragment the global economy or encourage the extension of the existing global multilateral trading system.


Terminology

A common market is seen as a stage of economic integration towards an economic union or possibly towards the goal of a unified market. A single market is a type of trade bloc in which most trade barriers (for goods) have been removed


Statistics


Comparison between regional trade blocs

1 not all members participating
2 involving
goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
,
services Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administrative service, a required part of the workload of Faculty (academic staff), university faculty * Civil service, the body of employees of a governm ...
,
telecommunications Telecommunication is the transmission of information by various types of technologies over , radio, , or other systems. It has its origin in the desire of humans for communication over a distance greater than that feasible with the , but with ...
,
transport Transport (in British English), or transportation (in American English), is the Motion, movement of humans, animals, and cargo, goods from one location to another. In other words, the action of transport is defined as a particular movement of ...

transport
(full
liberalisation Liberalization or Liberalisation (British English British English (BrE) is the standard dialect of the English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, earl ...
of
railway Rail transport (also known as train transport) is a means of transferring passengers and goods on wheeled vehicle A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor veh ...

railway
s from 2012),
energy In physics Physics is the that studies , its , its and behavior through , and the related entities of and . "Physical science is that department of knowledge which relates to the order of nature, or, in other words, to the regula ...

energy
(full liberalisation from 2007)
3
telecommunications Telecommunication is the transmission of information by various types of technologies over , radio, , or other systems. It has its origin in the desire of humans for communication over a distance greater than that feasible with the , but with ...
,
transport Transport (in British English), or transportation (in American English), is the Motion, movement of humans, animals, and cargo, goods from one location to another. In other words, the action of transport is defined as a particular movement of ...

transport
and
energy In physics Physics is the that studies , its , its and behavior through , and the related entities of and . "Physical science is that department of knowledge which relates to the order of nature, or, in other words, to the regula ...

energy
- proposed
4 sensitive goods to be covered from 2019
5 least developed members to join from 2012
6 least developed members to join from 2017
7 Additionally some non member states also participate (the
European Union The European Union (EU) is a political and economic union of that are located primarily in . The union has a total area of and an estimated total population of about 447million. has been established through a standardised that apply in ...

European Union
,
EFTA The European Free Trade Association (EFTA) is a regional trade organization A trade association, also known as an industry trade group, business association, sector association or industry body, is an organization founded and funded by busin ...
have overlapping membership and various common initiatives regarding the
European integration European integration is the process of industrial, economic integration, economic, political, legal, social and cultural Regional integration, integration of states wholly or partially in Europe or nearby. European integration has primarily ...
).
8 Additionally some non member states also participate (
ASEAN Plus Three ASEAN; ( , ) officially the Association of Southeast Asian Nations, is an economic union comprising 10 member states in Southeast Asia, which promotes intergovernmental organization, intergovernmental cooperation and facilitates economy, econom ...
)
9 Limited to "entitled persons" and duration of one year.


See also

*
Regional integration 350px, Several non-overlapping large alliances. Softer colours indicate observer/associate or candidate countries. Regional Integration is a process in which neighboring countries enter into an agreement in order to upgrade cooperation throu ...
*
Continental union A continental union is a regional organization which facilitates pan-continental integration. Continental unions vary from collaborative intergovernmental organization, intergovernmental organizations, to supranational union, supranational politi ...


References


Bibliography

* Mansfield, Edward D. and Helen V. Milner, "The New Wave of Regionalism" in * Milner, Helen V., "International Trade" in * * {{DEFAULTSORT:Trade Bloc *