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REGIONAL TRADE

AGREEMENTS:

MADE BY:
PRASHANT SINGH
SANCHIT SACHDEVA
MOHIT MISHRA
RASHI BISHT
HINDOL HAZRA
What is Regional Trade Agreement?

• Regional Trade agreements can be defined as a Exchange Tade


agreements within the two countries.
• Regional trade agreements (RTAs) cover more than half of
international trade and operate alongside global multilateral
agreements under the World Trade Organization (WTO).
• This was previously headed by the GATT (General Agreements on
Tariffs and Trade).
• This agreement is basically the form to remove the Tariffs on Imports
from regional partners.
NAFTA
• On January 1, 1994, the North American Free Trade Agreement
(NAFTA) between the United States, Canada, and Mexico entered
force to create a trilateral trading bloc in North America.
• NAFTA seeks to liberalize restrictions on trade among the three
countries.
• NAFTA aims to promote the conditions of free competition in order
to increase market access and investment opportunities within the
free trade area.
Objectives of NAFTA
• Grant the members “most favored nation” status.
• Eliminate barriers to trade and facilitate the cross-border movement of goods
and services.
• Promote conditions of fair competition.
• Increase investment opportunities..
• Create procedures for the resolution of trade disputes.
• Establish a framework for further trilateral, regional, and multilateral
cooperation to expand the trade agreement's benefits
IMPLICATION OF NAFTA
• Quadrupled Trade- It supported monetary development, benefits,
and employments for every one of the three nations.
• Lowered Process- Lower levies likewise decreased import costs. That
additionally decreased the danger of swelling and enabled the
Federal Reserve to keep loan costs low.
• Increased Economic Growth- NAFTA helped U.S. financial
development by as much as 0.5 percent a year. Three businesses
profited the most from expanded fares. They were agribusiness, car,
and administrations, for example, social insurance and money related
administration.
• Created Jobs- NAFTA sends out made five million new U.S.
employments.

• Increased Foreign Direct Investment- Since NAFTA was established,


U.S. FDI in Canada and Mexico has dramatically multiplied.

• Reduced Government Spending- NAFTA enabled firms in part


nations to offer on all administration contracts.
Benefits of NAFTA
NAFTA fulfilled all
7 of its goals, this
has made it the
world’s largest free
trade agreement in
terms of volume of
goods and services.

Increased
Better prices and
competitiveness of
selection is
the 3 member
available in
countries in the
consumer goods of
global
member countries.
marketplace.

Helped counter the


More than 40 launch of the
million jobs have European Union
been created in US and overcome the
alone since NAFTA. economic growth
of China.
Benefits of NAFTA
• Each NAFTA country waves off tariffs on imported goods
“originating” in the other NAFTA countries.
• This has given 360 degree benefit to businesses, consumers, families,
workers, and farmers of the member countries.
• Under NAFTA, merchandise trade between the U.S., Canada and
Mexico has tripled, reaching US$946.1 billion in 2008.
• Today, the NAFTA partners exchange about US$2.6 billion in goods
each day—that’s about US$108 million per hour.
• NAFTA has majorly benefitted US as it is the most integral part of this
agreement being the world’s largest economy.
NAFTA FOR BUSINESS
• According to a study by the Wharton School, Pennsylvania-
Investment in businesses has increased to US$1.1 trillion in 2016 from
US$290 billion in 1993.
• 3 economies have reorganized themselves to trade the products in
which they have comparative advantage over other partners.
• Automobile sector is an apt example, auto giants in US and Canada
have their plants in Mexico as well because its cheaper to
manufacture in Mexico than in US and Canada.
• NAFTA provides member nation’s businesses with better access to
materials, technologies, investment capital, and talent available.
EUROPEAN UNION
• European union is an international organization comprising
28 European countries and governing common economic,
social, and security policies.
• The EU was created by the Maastricht Treaty, which
entered into force on November 1, 1993.
• The EU was awarded the Nobel Prize for Peace in 2012, in
recognition of the organization’s efforts to promote peace
and democracy in Europe.
PURPOSE OF EUROPIAN UNION
• It works as a “Single market” through a standardized system of laws that
apply to all member nations.
• The fundamental purposes of the European Union are to promote greater
social, political and economic harmony among the nations of Western
Europe.
• Members may use a common currency ( euro ) that makes trade easier.
• EU works to improve trade, education, farming, & industry among its
members.
• No tariffs (taxes) among member countries – free trade zone Citizens of
one country can move freely to another country.
• The EU, abolished internal tariffs, and trade quotas, which means there is,
little tariff or no tariff, in trading between EU countries.
BENEFITS OF EU
• The main benefit of trading in the European Union (EU) is the European single market. It is the
largest international single market in the world, which has lead to:

• Greater competition in services - which is good for businesses and consumers


• Removal of trade barriers
• Reduction of business costs
• Greater business efficiency
• Elimination of anti-competitive practices - such as monopolies and cartels
• The EU has taken measures to reform and make it even easier for
countries to trade with each other, such as:

• Reducing paperwork
• Harmonizing standards - e.g. technical and safety standards
• Introducing the euro - allowing a single currency to trade with
• Enforcing the movement of people - allowing member state citizens
to move freely between other countries.
OTHER BENEFITS OF EU
Broad political and legal benefits
European harmony
Legal and human rights.
Prospect of membership has helped modernise countries, such as Turkey. . The
prospect of gaining membership of the EU, encourage countries to implement human
rights legislation.

Economic benefits
Free trade and removal of non-tariff barriers have helped reduce costs and prices for
consumers. Increased trade with the EU creates jobs and higher income. Over 52% of
UK exports are to the EU. Trade within the EU has increased 30% since 1992.
Labour and free movement of people

Free movement of labour and capital have helped create a more flexible
economy. For example, UK and Ireland have benefited from the
immigration of Eastern European workers to fill labour market shortages in
certain areas, such as plumbing, nursing and cleaning.
EU has enabled people to travel freely across national boundaries making
trade and tourism easier and cheaper.
Benefits of EU trade to consumers
• 3 main benefits from trade, of which two directly and one indirectly
contribute to benefit European consumers and their welfare:

• Decrease in prices for the same range of goods (direct);


• Increase in the variety of products (direct);
• Increase in the growth rate (indirect).
TRADING RELATIONS OF NAFTA AND EU

• The NAFTA and the European Union comprising 27 countries


constitute the largest trading blocs in the world.
• In 2008, the value of exports of goods and services from the European
Union to the NAFTA region amounted to 450.2 billion Euros while the
value of imports of goods and services to the European Union from
the NAFTA bloc amounted to 362.1 billion Euros.
• The two trade blocs are also highly interdependent through foreign
direct investment (FDI).
• In 2007, EU stocks of FDI in the NAFTA region was about 1.25 trillion
Euros while the relevant figure of the NAFTA in the EU bloc was
about 1.15 trillion Euros

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