This is the oldest Customs Union in the world, dating back to 1910, before its member countries were independent. It is a link between five countries in South Africa: Botswana, Lesotho, Namibia, South Africa and Swaziland. This implies that members can negotiate as a single bloc with other countries or with other trade blocs.įor example, the Southern African Customs Union - SACU, for its acronym in English. Its particularity is that it includes the creation of a unified external tariff against non-members. The customs union refers to the elimination of tariff barriers between member countries. However in this case, the agreements apply to all goods that are exchanged between them.
#Trade blocs definition free
Free trade areaįree trade areas, like the preferential trade areas, are those where countries in a region agree to eliminate or reduce barriers to trade. The objective is to facilitate trade between member countries but also serves as a first step towards the creation of a common market. The former are established between three or more countries and the latter, less frequent, are established only between two countries.įor example, the Economic Cooperation Organization (ECO) is a preferential trade zone established between Iran Pakistan and Turkey. There are multilateral and bilateral preferential trade zones. However, each country maintains its own tariffs against non-member countries. The areas of preferential trade are those where a group of countries agree to reduce or eliminate tariffs for trade in some products. In some cases, trade is only facilitated, but in others, important joint decisions are made and even currency is shared. These are classified according to the degree of openness of tariffs and the depth of established agreements. There are different types of economic blocks. Thanks to these types of blocs, it is possible to eliminate the economic barriers that exist between countries, allowing the growth of trade and greater circulation of labor and capital.
The EU also works with the World Trade Organization (WTO) to help set global trade rules and remove obstacles to trade between WTO members.This is a phenomenon typical of Globalization.
#Trade blocs definition how to
At the same time, the EU supports foreign companies with practical information on how to access the EU market. The EU supports and defends EU industry and business by working to remove trade barriers so that European exporters gain fair conditions and access to other markets. The EU also gets input from the public, businesses, and non-government bodies when negotiating trade agreements or rules. EU companies can grow their business, and can also more easily import the raw materials they use to make their products.Įach agreement is unique and can include tariff reductions, rules on matters such as intellectual property or sustainable development, or clauses on human rights. These agreements grant mutually-beneficial access to the markets of both the EU and the countries concerned. The EU actively engages with countries or regional groupings to negotiate trade agreements. Speaking as one voice, the EU carries more weight in international trade negotiations than each individual member would. The EU is responsible for the trade policy of the member countries and negotiates agreements for them. Free trade among its members was one of the EU's founding principles, and it is committed to opening up world trade as well.įrom 1999 to 2010, EU foreign trade doubled and now accounts for over 30% of the EU’s gross domestic product (GDP).
It is also the world’s largest single market area. The European Union is one of the most outward-oriented economies in the world.
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