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APROJECT REPORT

ON

STUDY ON TRADING BLOCS

MASTERS OF COMMERCE

BANKING & FINANCE

PART -1

2015-2016

SUBMITTED BY:

JIGNA M. BHANUSHALI

ROLL NO – 01

PROJECT GUIDE

MS. KALAVATI

SK SOMAIYA COLLEGE OF ARTS SCIENCE AND COMMERCE, VIDYAVIHAR (EAST), MUMBAI – 400077

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CERTIFICATE

This is to certify that MS. JIGNA M. BHANUSHALI of M.Com (BANKING

AND FINANCE) Semester- 1(2015-16) has successfully completed the project on

Study on non-performing Assets under the guidance of MS.KALAVATI

________________ ________________

Course Coordinator Principal

________________

Project Guide/Internal Examiner

_______________

External Examiner

Date:

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DECLARATION

I JIGNA M. BHANUSHALI student of class in M.com (BANKING &

FINANCE) PART 1 (SEM-1), ROLL NO.01 , academic year 2015-2016

Studying at S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND

COMMERCE, hereby declare that the work done on the project Entitled “Study

on TRADING BLOCS” is true and original and any Reference used in this

project is duly acknowledged.

Date:

Place:

_________________

Student Signature

JIGNA M. BHANUSHALI

Roll No. 01

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ACKNOWLEDGEMENT

Talent and capabilities are of course necessary but opportunities and good

guidance is very important things without which no person can climb those infant

ladders towards progress.

With regard to my project I would like to thank each and every one who offered

help, guidance and support whenever required.

I take immense pleasure in thanking MS.KALAVATI and other staff for their

support and guidance in the project work.

I am extremely grateful to my MS. KALAVATI madam for her valuable

guidance and kind suggestions.

Finally and yet importantly I would like to express my heartfelt thanks to my

beloved parents and friends for their blessings, my classmates for their help and

wishes for the successful completion of this project.

_______________

JIGNA M. BHANUSHALI

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INDEX

SR.NO PARTICULARS PAGE NO.

1. Introduction 62. Meaning and definition 73. Types of trading blocs 8-94. Advantages and disadvantages of trade blocs 10-115. Political effects 12-136. Major trade blocs 147. History of trading blocs 15-178. THE EUROPEAN UNION (EU) 18-249. NORTH AMERICAN FREE TRADE

AGREEMENT (NAFTA)25-30

10. SOUTH ASIAN FREE TRADE AGREEMENT (SAFTA)

31-35

11. THE ORGANIZATIONAL OF THE PETROLEUM (OPEC)

36-43

12. ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)

44-47

13. SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION(SAARC)

48-52

14. CONCLUSION 5315. BIBLOGRAPHY 54

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TRADING BLOCS

INTRODUCTION A trade bloc is a type of intergovernmental agreement, often part of a

regional intergovernmental organization, where regional barriers to trade,

(tariffs and non-tariff barriers) are reduced or eliminated among the participating

states.

Historic economic blocs include the Hanseatic League, a trading alliance in

northern Europe in existence between the 13th and 17th centuries and the German

Customs Union (Zollverein) initiated in 1834, formed on the basis of the German

Confederation and subsequently German Empire from 1871. Surges of trade bloc

formation were seen in the 1960s and 1970s, as well as in the 1990s after

the collapse of Communism. By 1997, more than 50% of all world commerce was

conducted within regional trade blocs.

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Economist Jeffrey J. Scott of the Peterson Institute for International

Economics notes that members of successful trade blocs usually share four

common traits: similar levels of per capita GNP, geographic proximity, similar or

compatible trading regimes, and political commitment to regional organization.

Advocates of worldwide free trade are generally opposed to trading blocs, which,

they argue, encourage regional as opposed to global free trade. Scholars and

economists continue to debate whether regional trade blocs are leading to a more

fragmented world economy or encouraging the extension of the existing

global multilateral trading system.

Trade blocs can be stand-alone agreements between several states (such as

the North American Free Trade Agreement (NAFTA)) or part of a regional

organization (such as the European Union). Depending on the level of economic

integration, trade blocs can fall into different categories, such as: preferential

trading areas, free trade areas, customs unions, common markets and economic and

monetary unions.

DEFINATION :

A set of countries which engage in international trade together, and are usually

related through a free trade agreement or other association.

MEANING:

Are intergovernmental associations that manage & promote trade activities for

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specific regions of the world . It’s a group of countries within a geographical

region that protect themselves from imports from non-members .

Are form of economic integration & increasingly shape the pattern of world trade .

an agreement between states , regions , or countries to reduce barriers to trade

between the participating regions

TYPES OF TRADING BLOCS

There are five different types of economic integration as given below

1. Free Trade Area

2. Custom Union

3. Common Market

4. Complete Economic Union

5. Complete Political Integration.

1. Free Trade Area

In this form of economic integration, member nations remove all trade

impediments among themselves but retain their own policies with the outside

world. That to say, the member countries do not charge any import tariff on

imports from each other but they do have their respective policies as regards levy

of import tariffs on imports from the countries outside the group.

2. Custom union

This arrangement of economic integration is a similar to free trade area. Besides,

member nations have common external commercial relations. For example, they

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adopt common external tariff on imports from the non member nations. Thus,

custom union marks the second stage of economic integration amongst the nations.

3. Common Market

In this type of economic integration, the member nations have custom union

agreement with one another and they also agree for factor mobility across the

national borders of member countries. Thus, the common market arrangement

permits free movement of labor and capital amongst the member nations.

4. Complete Economic Union

This is the final stage of economic integration to provide the basis for complete

political integration. In this type of economic integration, member countries are

part of common market and agree to have complete unification of monetary and

fiscal policies. This arrangement is akin to economic and monetary union amongst

the member nations. In a recent development, eleven out of fifteen countries of the

European Union have agreed to move forward to forge economic and monetary

union amongst themselves with effect from 1.1.1999 when they decided to have a

common currency unit called Euro. There eleven countries are Belgium, France,

Germany, Italy, Luxembourg, Netherlands, Austria, Ireland, Portugal, Spain and

Finland.

5. Complete Political Integration

This is the ultimate stage of integration amongst the nations when the member

nations literally merge their individual identities into one nation. In this form, the

nation members have a central parliament with the sovereignty of a national

government

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Advantages and Disadvantages of trade blocs

There are five major advantages of trade bloc agreements: foreign direct

investment, economies of scale, competition, trade effects, and market efficiency.

Foreign Direct Investment: An increase in foreign direct investment results from

trade blocs and benefits the economies of participating nations. Larger markets are

created, resulting in lower costs to manufacture products locally.

Economies of Scale: The larger markets created via trading blocs permit

economies of scale. The average cost of production is decreased because mass

production is allowed.

Competition: Trade blocs bring manufacturers in numerous countries closer

together, resulting in greater competition. Accordingly, the increased competition

promotes greater efficiency within firms.

Trade Effects Trade blocs eliminate tariffs, thus driving the cost of imports down.

As a result, demand changes and consumers make purchases based on the lowest

prices, allowing firms with a competitive advantage in production to thrive.

Market Efficiency: The increased consumption experienced with changes in

demand combines with a greater amount of products being manufactured to result

in an efficient market.

The disadvantages, on the other hand, include: regionalism vs. multinationalism,

loss of sovereignty, concessions, and interdependence.

Regionalism vs. Multinationalism: Trading blocs bear an inherent bias in favor of

their participating countries. For example, NAFTA, a free trade agreement between

the United States, Canada and Mexico, has contributed to an increased flow of

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trade among these three countries. Trade among NAFTA partners has risen to more

than 80 percent of Mexican and Canadian trade and more than a third of U.S. trade,

according to a 2009 report by the Council on Foreign Relations. However, regional

economies by establishing tariffs and quotas that protect intra-regional trade from

outside forces, according to the University of California Atlas of Global

Inequality . Rather than pursuing a global trading regime within the World Trade

Organization, which includes the majority of the world's countries, regional trade

bloc countries contribute to regionalism rather than global integration.

Loss of Sovereignty: A trading bloc, particularly when it is coupled with

a political union, is likely to lead to at least partial loss of sovereignty for its

participants. For example, the European Union, started as a trading bloc in 1957 by

the Treaty of Rome, has transformed itself into a far-reaching political organization

that deals not only with trade matters, but also with human rights, consumer

protection, greenhouse gas emissions and other issues only marginally related to

trade.

Concessions: No country wants to let foreign firms gain domestic market share at

the expense of local companies without getting something in return. Any country

that wants to join a trading bloc must be prepared to make concessions. For

example, in trading blocs that involve developed and developing countries, such

as bilateral agreements between the U.S. or the EU and relatively poor Asian, Latin

American or African countries, the latter may have to allow multinational

corporations to enter their home markets, making some local firms uncompetitive.

Interdependence: Because trading blocs increase trade among participating

countries, the countries become increasingly dependent on each other. A disruption

of trade within a trading bloc as a result of a natural disaster, conflict or revolution

may have severe consequences for the economies of all participating countries

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WHY DO COMPANY FORM TRADING BLOCS ?

PRIMARY OBJECTIVE – regional integration which enables countries to

take advantages of geographical proximity as well as the enlarged market

formed after such mergers .

DEEPER OBJECTIVE - To integrate their economies .

The growth in these number of blocs is a major development of recent

years & significant fraction of global trade is done through them .

Trade bloc compliment global trade

Protect intra regional trade form outside forces .

Establish regional security .

WHAT ARE THE POLITICAL IMPLICATIONS OF

TRADING BLOCS ?

Increased trade & interlocking has reduced the risks of war as the cost

become higher for both countries

Ensures that a change in government in a member state does not

result in policy reversal

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EXAMPLE : france & germany fought 3 war in 70 yrs , but in the

present situation the trade arrangements have made it virtually

impossible for them to wage .

MERCOSUR has reduced tensions between Brazil & Argentina

Association of southeast Asian Nations ( ASEAN) has played pacifier

between Indinesia & Malaysia .

WHY ARE TRADING BLOCS UNDESIRABLE ?

IMPORT QUOTES ( limiting the amount of imports into the country so

that domestic consumers buy products made by their countries in their

region )

CUSTOM DELAYS ( establishing bureaucratic formalities that slow down

trade from the other region )

SUBSIDIES BARRIER ( giving heavy subsidies to protect regional trade )

VOLUNTARY BOYCOTTS & TECHNICAL BARRIERS

MAJOR TRADE BLOCS

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EUROPEAN UNION (EU)

NORTH AMERICA FREE TRADE AGREEMENT (NAFTA)

SINGAPORE – AMERICA FREE TRADE AGREEMENT (SAFTA)

ORGANISATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)

ASSOCIATION OF SOUTH EAST ASIAN NATION ( ASEAN)

SOUTH ASIAN ASSOCIATION OF REGIONAL CO-OPERATION

(SAARC)

HISTORY OF TRADING BLOCS

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For years the champion of multilateralism was the United States. However,

multilateral trade negotiations in the 1980s were slow and tedious, thus leading the

U.S. to move away from its policy of supporting only multilateral trade

negotiations as a mechanism for encouraging free trade. This new U.S. policy

fosters the development of both multilateral liberalization trade and preferential

trade agreements.

Since the mid-1980s there has been a profound change in the structure of the

international economy due to the widespread growth and internal enhancement of

regional trading blocs in all parts of the globe. The World Trade Organization

(WTO), for example, notes that almost all of its 134 members are signatories to

regional trade agreements with other countries. As of February 1999 the

GATT/WTO has been notified of 184 regional trade agreements of which 109 are

currently in effect (see WTO 1999 web page).' These regional trade groups,

according to Fred Bergsten of the Institute for International Economics, account

for approximately 60 percent of world trade (Anon. 1999).

Among the most notable and impactful of these trade arrangements include the

North American Free Trade Agreement (NAFTA) and the European Union (EU).

The plan to establish the Asian-Pacific Economic Cooperation Group by 2020

(2010 for developed economies; 2020 for developing ones) should be an equally

important development (APEC Secretariat 1999).

The United States, Mexico, and Canada created a free-trade area that became

effective in January 1994. The members of NAFTA have declared their aspiration

of incorporating much of Latin America and the Caribbean, thus ultimately

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establishing a Free Trade Area of the Americas (FTAA). Efforts are underway to

make the FTAA a reality by 2005 (Office of NAFTA & Inter-American Affairs

2000). This area collectively will have a gross domestic product (GDP) of $2

trillion with a population of almost 500 million by the year 2000. According to the

President of Pakistan's Institute for Development Research, 87 percent of world

trade is currently accounted for by three blocs of 33 countries; namely NAFTA, the

EU, and APEC (Anon. 2000).

The European Union's intensification of its program with its membership now

totaling 15 members and a new common currency for 11 of its 15 members

currently results in the establishment of the world's largest single market. Further

expansion is anticipated, particularly into Central Europe, with the addition of up

to ten new members over the next few years. It is estimated that the EU generates

31 percent of total world output and commands more than 20 percent of world

trade (Weindenfeld 1999).

The Asia-Pacific Economic Cooperation (APEC), in spite of the financial problems

the area experienced in 1997 and 1998, is still one of the fastest-growing regions in

the world. By 1998, APEC's 21 member economies produced a Gross Domestic

Product of more than US$16 trillion; this represents approximately 42 percent of

global trade (Asia-Pacific Cooperation 2000). In contrast to other regional

integrations, APEC, an open regional organization, represents an approach to

integration that is concordant with the multilateralism of the WTO (Kim and Koo

1997).

While the history of trade is replete with regional trade bloc formation, we know

little as to why or how these blocs form. At first, it was implicitly assumed that the

trade blocs formed because there were some inherent benefits to the participants.

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However, a review of the existing knowledge of this area calls that proposition into

question.

THE EUROPEAN UNION

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The European Union (EU) is a politico-economic union of 28 member states that

are located primarily in Europe. The EU operates through a system

of supranational institutions and intergovernmental-negotiated decisions by the

member states.[14][15] The institutions are: the European Commission, the Council of

the European Union, the European Council, the Court of Justice of the European

Union, the European Central Bank, the European Court of Auditors, and

the European Parliament. The European Parliament is elected every five years

by EU citizens.

The EU traces its origins from the European Coal and Steel Community (ECSC)

and the European Economic Community (EEC), formed by the Inner Six countries

in 1951 and 1958, respectively. In the intervening years, the community and its

successors have grown in size by the accession of new member states and in power

by the addition of policy areas to its remit. The Maastricht Treatyestablished the

European Union under its current name in 1993 and introduced European

citizenship. The latest major amendment to the constitutional basis of the EU,

the Treaty of Lisbon, came into force in 2009.

The EU has developed a single market through a standardised system of laws that

apply in all member states. Within the Schengen Area, passport controls have been

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abolished . EU policies aim to ensure the free movement of people, goods,

services, and capital, enact legislation in justice and home affairs, and maintain

common policies on trade, agriculture, fisheries, and regional development.

The monetary union was established in 1999 and came into full force in 2002. It is

currently composed of 19 member states that use the euro as their legal tender.

Through the Common Foreign and Security Policy, the EU has developed a role

in external relations and defence . The union maintains permanent diplomatic

missions throughout the world and represents itself at the United Nations,

the WTO, the G8, and the G-20.

With a combined population of over 508 million inhabitants, or 7.3% of the world

population, the EU in 2014 generated a nominal gross domestic product (GDP) of

18.495 trillion US dollars, constituting approximately 24% of global nominal

GDP and 17% when measured in terms of purchasing power parity. As of 2014 the

EU has the largest economy in the world, generating a GDP bigger than any

other economic union or country. Additionally, 26 out of 28 EU countries have a

very high Human Development Index, according to the UNDP. In 2012, the EU

was awarded the Nobel Peace Prize.

Preliminary

After World War II, European integration was eyed as an escape from the extreme

nationalism that had devastated the continent. The 1948 Hague Congress was a

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pivotal moment in European federal history, as it led to the creation of

the European Movement Internationaland of the College of Europe, where

Europe's future leaders would live and study together. 1952 saw the creation of

the European Coal and Steel Community, which was declared to be "a first step in

the federation of Europe.". The supporters of the Community included Alcide De

Gasperi, Jean Monnet, Robert Schuman, and Paul-Henri Spaak.]

Member states

Through successive enlargements, the Union has grown from the six founding

states—Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands

—to the current 28. Countries accede to the union by becoming party to the

founding treaties, thereby subjecting themselves to the privileges and obligations

of EU membership. This entails a partial delegation of sovereignty to the

institutions in return for representation within those institutions, a practice often

referred to as "pooling of sovereignty".

To become a member, a country must meet the Copenhagen criteria, defined at the

1993 meeting of the European Council in Copenhagen. These require a stable

democracy that respects human rights and the rule of law; a functioning market

economy; and the acceptance of the obligations of membership, including EU law.

Evaluation of a country's fulfilment of the criteria is the responsibility of the

European Council. No member state has ever left the Union,

although Greenland (anautonomous province of Denmark) withdrew in

1985. The Lisbon Treaty now contains a clause providing for a member to leave

the EU.

There are six countries which are recognized as candidates for

membership: Albania, Iceland, Macedonia,[e] Montenegro, Serbia , and Turkey.

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However, on 13 June 2013, Iceland's Foreign Minister, Gunnar Bragi Sveinsson ,

informed the European Commission that the newly elected government intended to

"put negotiations on hold". Bosnia and Herzegovinaand Kosovo are officially

recognised as potential candidates, but have not submitted membership

applications. Due to the lack of recognition by five of the 28 EU member states,

the European Commission refers only to "Kosovo*", with an asterisked footnote

containing the text agreed to by the Belgrade–Pristina negotiations: "This

designation is without prejudice to positions on status, and is in line with UNSCR

1244 and the ICJ Opinion on the Kosovo Declaration of Independence."

Four countries forming the European Free Trade Association (EFTA) (that are not

EU members) have partly committed to the EU's economy and regulations:

Iceland, Liechtenstein and Norway, which are a part of the single market through

the European Economic Area, and Switzerland, which has similar ties

through bilateral treaties. The relationships of the European

microstates, Andorra, Monaco, San Marino, and the Vatican include the use of the

euro and other areas of co-operation.

Monetary union

The creation of a European single currency became an official objective of the

European Economic Community in 1969. In 1992, after having negotiated the

structure and procedures of a currency union, the member states signed

the Maastricht Treaty and were legally bound to fulfill the agreed-on rules

including the convergence criteria if they wanted to join the monetary union. The

states wanting to participate had first to join the European Exchange Rate

Mechanism.

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In 1999 the currency union started, first as an accounting currency with eleven

member states joining. In 2002, the currency was fully put into place, when euro

notes and coins were issued and national currencies began to phase out in the

eurozone, which by then consisted of 12 member states. The eurozone (constituted

by the EU member states which have adopted the euro) has since grown to 19

countries, the most recent being Lithuania which joined on 1 January 2015.

Denmark, the United Kingdom, and Sweden decided not to join the euro.

Since its launch the euro has become the second reserve currency in the world with

a quarter of foreign exchanges reserves being in euro. The euro, and the monetary

policies of those who have adopted it in agreement with the EU, are under the

control of the European Central Bank(ECB).

The ECB is the central bank for the eurozone, and thus controls monetary policy in

that area with an agenda to maintain price stability. It is at the centre of

the European System of Central Banks, which comprehends all EU national central

banks and is controlled by its General Council, consisting of the President of the

ECB, who is appointed by the European Council, the Vice-President of the ECB,

and the governors of the national central banks of all 28 EU member states.

The European System of Financial Supervision is an institutional architecture of

the EU's framework of financial supervision composed by three authorities:

the European Banking Authority, the European Insurance and Occupational

Pensions Authority and the European Securities and Markets Authority. To

complement this framework, there is also a European Systemic Risk Board under

the responsibility of the ECB. The aim of this financial control system is to ensure

the economic stability of the EU.

To prevent the joining states from getting into financial trouble or crisis after

entering the monetary union, they were obliged in the Maastricht treaty to fulfill

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important financial obligations and procedures, especially to show budgetary

discipline and a high degree of sustainable economic convergence, as well as to

avoid excessive government deficits and limit the government debt to a sustainable

level.

Some states joined the euro but violated these rules and contracts to an extent that

they slid into a debt crisis and had to be financially supported with emergency

rescue funds. These states were Greece, Ireland, Portugal, Cyprus and Spain.

Even though the Maastricht treaty forbids eurozone states to assume the debts of

other states ("bailout"), various emergency rescue funds had been created by the

members to support the debt crisis states to meet their financial obligations and buy

time for reforms that those states can gain back their competitiveness.

Energy

In 2006, the EU-27 had a gross inland energy consumption of 1,825 million tonnes

of oil equivalent (toe). Around 46% of the energy consumed was produced within

the member states while 54% was imported. In these statistics, nuclear energy is

treated as primary energy produced in the EU, regardless of the source of the

uranium, of which less than 3% is produced in the EU.

The EU has had legislative power in the area of energy policy for most of its

existence; this has its roots in the original European Coal and Steel Community.

The introduction of a mandatory and comprehensive European energy policy was

approved at the meeting of the European Council in October 2005, and the first

draft policy was published in January 2007.

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The EU has five key points in its energy policy: increase competition in

the internal market, encourage investment and boost interconnections between

electricity grids; diversify energy resources with better systems to respond to a

crisis; establish a new treaty framework for energy co-operation with Russia while

improving relations with energy-rich states in Central Asia and North Africa; use

existing energy supplies more efficiently while increasing renewable energy

commercialisation ; and finally increase funding for new energy technologies.

The EU currently imports 82% of its oil, 57% of its natural gas and 97.48% of its

uranium demands. There are concerns that Europe's dependence on Russian

energy is endangering the Union and its member countries. The EU is attempting

to diversify its energy supply.

NORTH AMERICAN FREE TRADE AGREEMENT

(NAFTA)

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In 1994, the North American Free Trade Agreement (NAFTA) came into effect,

creating one of the world’s largest free trade zones and laying the foundations for

strong economic growth and rising prosperity for Canada, the United States, and

Mexico. Since then, NAFTA has demonstrated how free trade increases wealth and

competitiveness, delivering real benefits to families, farmers, workers,

manufacturers, and consumers.

The NAFTA partners have created this website to provide Canadians, Americans,

and Mexicans with information about how NAFTA works and the many ways in

which it has improved the lives of North Americans.

A number of NAFTA institutions work to ensure smooth implementation and day-

to-day oversight of the Agreement’s provisions.

Free Trade Commission

Made up of ministerial representatives from the NAFTA partners.

Supervises the implementation and further elaboration of the Agreement and

helps resolve disputes arising from its interpretation.

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Oversees the work of the NAFTA committees, working groups, and other

subsidiary bodies.

NAFTA Coordinators

Senior trade department officials designated by each country.

Responsible for the day-to-day management of NAFTA implementation.

NAFTA Working Groups and Committees

Over 30 working groups and committees have been established to facilitate trade

and investment and to ensure the effective implementation and administration of

NAFTA.

Key areas of work include trade in goods, rules of origin, customs, agricultural

trade and subsidies, standards, government procurement, investment and

services, cross-border movement of business people, and alternative dispute

resolution.

NAFTA Secretariat

Made up of a “national section” from each member country.

Responsible for administering the dispute settlement provisions of the

Agreement and for administering dispute resolution processes under Chapter 14,

Chapter 19 and Chapter 20. Also has certain responsibilities related to the

Chapter 11 dispute settlement provisions concerning investment.

Maintains a court-like registry relating to panel, committee, and tribunal

proceedings.

Maintains a tri-national website containing up-to-date information on past and

current disputes.  

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Commission for Labor Cooperation

Created to promote cooperation on labor matters among NAFTA members and

the effective enforcement of domestic labor law.

Consists of a Council of Ministers (comprising the labor ministers from each

country) and a Secretariat, which provides administrative, technical, and

operational support to the Council and implements an annual work program.

Departments responsible for labor in each of the three countries serve as

domestic implementation points.  

THE AGREEMENT

Market Access for Goods

The elimination of duties on thousands of goods crossing borders within North

America.

Phased-in tariff reductions – now complete – and special rules for

agricultural, automotive, and textile and apparel products.

Important rights for NAFTA services providers and users across a broad

spectrum of sectors.

Special commitments regarding telecommunications and financial services.

Formal dispute resolution processes that help resolve differences that arise in the

interpretation or application of NAFTA’s rules.

Protection for Foreign Investment

Commitment to treat each others’ investors and their investments in the territory

of the host NAFTA country no less favorably than their own domestic investors.

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Commitment to provide NAFTA investors with the best treatment given to

foreign investors from beyond North America.

A transparent and binding dispute resolution mechanism specially designed to

deal with investment.

Protection for Intellectual Property

Adequate and effective protection and enforcement of a broad range of

intellectual property rights (including through patents, trademarks, copyrights,

and industrial designs), while ensuring that the measures that enforce these rights

do not themselves become barriers to legitimate trade.

Easier Access for Business Travelers

Easier access for business professionals in hundreds of different professions so

that they can travel for business throughout the continent.

Access to Government Procurement

Access to government procurement opportunities at the federal levels in Canada,

Mexico, and the United States.

Rules of Origin

NAFTA rules of origin are used to determine whether a good is eligible for

preferential treatment under NAFTA.

At various times since NAFTA came into effect, the partners have implemented

measures to liberalize or expand the list of products that qualify for preferential

treatment. Since 2005, for example, the NAFTA partners have implemented two

sets of changes to make it easier for traders to qualify for duty-free treatment

under NAFTA.

Side Agreements

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The NAFTA partners also negotiated two side agreements: the North American

Agreement on Environmental Cooperation and the North American Agreement on

Labor Cooperation.

DISPUTE SETTLEMENT

The North American Free Trade Agreement (NAFTA) includes impartial, rules-

based dispute resolution mechanisms to provide the assurance of fairness and

predictability that North American businesses need to engage in commercial

exchanges. Under NAFTA, our businesses can trade and invest with the knowledge

that rules exist to ensure fair treatment and that procedures are in place to settle

disputes impartially, on the rare occasions when they occur.

Today, the vast majority of trade and investment among the NAFTA partners takes

place in accordance with the clear and well-established rules of NAFTA and the

World Trade Organization. While disputes rarely emerge, NAFTA directs those

concerned to try to resolve their differences through NAFTA committees and

working groups or through other consultations. If no mutually acceptable solution

is found, NAFTA also provides for specific formal mechanisms as follows:

Anti-dumping and Countervailing Duties

Chapter 19 offers exporters and domestic producers an effective and direct route

to make their case and appeal the results of trade-remedy investigations before

an independent and objective binational panel. This process is an alternative to

judicial review of such decisions before domestic courts. This mechanism has

been effective in providing for the efficient and impartial review of trade remedy

determinations made by the investigating authorities of all three NAFTA

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partners. To date, panels have sustained some decisions made by domestic

investigating authorities, but have also remanded others for reconsideration.

The NAFTA Secretariat is responsible for the administration of the Chapter 19

dispute settlement process.

General Dispute Settlement

Chapter 20 offers a three-step process for resolving disputes regarding the

implementation or interpretation of NAFTA provisions:

The first step is the consultation process where the disputing parties

formally discuss the disagreement.

If the first step does not resolve the dispute, ministers will try to reach

agreement at a Free Trade Commission meeting.

If the second step does not resolve the dispute, the complainant can

request that a panel be set up to review the dispute and issue a binding

decision.

The NAFTA Secretariat is responsible for the administration of the Chapter 20

dispute settlement process.

foreign investment

establishes a mechanism for the settlement of investment disputes between

investors and NAFTA partners. This process assures both equal non-

discriminatory treatment among NAFTA investors (in accordance with the

principle of international reciprocity) and due process before an impartial

tribunal

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SOUTH ASIAN FREE TRADE AREA (SAFTA)

The South Asian Free Trade Area (SAFTA) is an agreement reached on 6

January 2004 at the 12th SAARC summit in Islamabad , Pakistan. It created a free

trade area of 1.6billion people

in Afghanistan, Bangladesh, Bhutan, India, Maldives ,Nepal, Pakistan and Sri

Lanka (as of 2011, the combined population is 1.8 billion people). The seven

foreign ministers of the region signed a framework agreement on SAFTA to

reduce customs duties of all traded goods to zero by the year 2016.

The SAFTA agreement came into force on 1 January 2006 and is operational

following the ratification of the agreement by the seven governments. SAFTA

requires the developing countries in South Asia (India, Pakistan and Sri Lanka) to

bring their duties down to 20 percent in the first phase of the two-year period

ending in 2007. In the final five-year phase ending 2012, the 20 percent duty will

be reduced to zero in a series of annual cuts. The least developed nations in South

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Asia (Nepal, Bhutan, Bangladesh, Afghanistan and Maldives) have an additional

three years to reduce tariffs to zero. India and Pakistan ratified the treaty in 2009,

whereas Afghanistan as the 8th member state of the SAARC ratified the SAFTA

protocol on the 4th of May 2011.

The Agreement on SAARC Preferential trading Arrangement (SAPTA)[2] was

signed on 11 April 1993 and entered into force on 7 December 1995, with the

desire of the Member States of SAARC (India, Pakistan, Nepal, Sri

Lanka, Bangladesh, Bhutan and the Maldives) to promote and sustain mutual trade

and economic cooperation within the SAARC region through the exchange of

concessions.

The establishment of an Inter-Governmental Group (IGG) to formulate an

agreement to establish a SAPTA by 1997 was approved in the Sixth Summit of

SAARC held in Colombo in December 1991.

The basic principles underlying SAFTA are as under;

1. overall reciprocity and mutuality of advantages so as to benefit equitably all

Contracting States, taking into account their respective level of economic

and industrial development, the pattern of their external trade, and trade and

tariff policies and systems;

2. negotiation of tariff reform step by step, improved and extended in

successive stages through periodic reviews;

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3. recognition of the special needs of the Least Developed Contracting States

and agreement on concrete preferential measures in their favour;

4. inclusion of all products, manufactures and commodities in their raw, semi-

processed and processed forms.

Purpose of the agreement

The purpose of SAFTA is to encourage and elevate common contract among the

countries such as medium and long term contracts. Contracts involving trade

operated by states, supply and import assurance in respect of specific products etc.

It involves agreement on tariff concession like national duties concession and non-

tariff concession.

Objective

The objective of the agreement is to promote competition in the area and to

provide equitable benefits to the countries involved. It aims to benefit the people of

the country by bringing transparency and integrity among the nations. SAFTA was

also formed in order to increase the level of trade and economic cooperation

among the SAARC nations by reducing the tariff and barriers and also to provide

special preference to the Least Developed Countries (LDCs)among the SAARC

nations.

Instruments

Following are the instrument involved in SAFTA:-

Trade Liberalisation Programme

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Rules of Origin

Institutional Arrangements

Consultations and Dispute Settlement Procedures

Safeguard Measures

Any other instrument that may be agreed upon.

Trade Liberalisation Programme

According to the Trade Liberalisation Programme Contracting countries must

follow the following tariff reduction schedule. There should be a fall to 20% tariff

from the existing tariff by the Non Least Developing Countries and 30% reduction

from the existing tariff by the Least Developing Countries. But trade liberalisation

scheme is not be applied for the sensitive list because this list is to be negotiated

among the contracting countries and then to be traded. Sensitive list will involve

common agreement among the contracting countries favouring the least developed

contracting countries. SAFTA Ministerial Council (SMC) will be participating to

review the sensitive list in every four years with view of reducing the list.

Sensitive list[edit]

A sensitive list is a list with every country which does not include tariff

concession. Bangladesh has 1,233 products on the sensitive list for the Least

Developing countries and 1,241 for the non-Least developing countries under the

SAFTA. Bangladesh will reduce the sensitive list by 246 items for the least

developed countries (LDCs) and 248 for the non-LDCs.[5] India has 25 items on the

sensitive list for the LDCs and 695 for the non-LDCs. Dr Manmohan Singh, the

Indian Prime Minister, announced in September in Dhaka that he will reduce the

Sensitive List by 46. Bhutan has 150 items for both the LDCs and non-LDCs and

has no plan of shortening its list. Nepal has 1,257 for the LDCs and 1,295 for the

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non-LDCs. Nepal has reduced its list by 259 from its previous list of 1295. Now

it's 1036, said joint secretary at Ministry of Commerce and

Supplies. The Maldives has 681 for all seven SAFTA nations. Pakistan had 1,169

in its sensitive list but has cut its sensitive list by 20% to 936. Sri Lanka has 1,042

and Afghanistan has 1,072 items on the negative list.

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THE ORGANIZATION OF THE PETROLEUM

EXPORTING COUNTRIES (OPEC)

Organization of the Petroleum Exporting Countries (OPEC,  is an international

organization headquartered in Vienna, Austria. OPEC was established

in Baghdad, Iraq on 10–14 September 1960. OPEC was formed when the

international oil market was largely dominated by a group of multinational

companies known as the 'seven sisters'. The formation of OPEC represented a

collective act of sovereignty by oil exporting nations, and marked a turning point

in state control over natural resources. In the 1960s OPEC ensured that oil

companies could not unilaterally cut prices. In December 2014, OPEC and the oil

men were named in the top 10 most influential people in the shipping industry by

Lloyds.

OPEC's mandate is to "coordinate and unify the petroleum policies" of its members

and to "ensure the stabilization of oil markets in order to secure an efficient,

economic and regular supply of petroleum to consumers, a steady income to

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producers, and a fair return on capital for those investing in the petroleum

industry." In 2014 OPEC comprised twelve

members: Algeria, Angola,Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Sau

di Arabia, the United Arab Emirates, and Venezuela. According to the United

States Energy Information Administration (EIA), OPEC crude oil production is an

important factor affecting global oil prices. OPEC sets production targets for its

member nations and generally, when OPEC production targets are reduced, oil

prices increase. Projections of changes in Saudi production result in changes in the

price of benchmark crude oils.]

History

In 1949 Venezuela and Iran were the first countries to move towards the

establishment of OPEC by approaching Iraq, Kuwait and Saudi Arabia, suggesting

that they exchange views and explore avenues for regular and closer

communication among petroleum-producing nations.

In 1959, the International Oil Companies (IOCs) reduced the posted price for

Venezuelan crude by 5¢ and then 25¢ per barrel, and that for Middle Eastern crude

by 18¢ per barrel.

The First Arab Petroleum Congress convened in Cairo, Egypt, where they

established an ‘Oil Consultation Commission’ to which IOCs should present price

change plans to authorities of producing countries. In 1959 journalist Wanda

Jablonski introduced Abdullah Tariki to Juan Pablo Perez Alfonzo at the Arab Oil

Congress in Cairo. They were both infuriated by the cut in posted prices by IOCs

or Multinational Oil Companies (MOCs). This meeting resulted in the Maadi Pact

or Gentlemen's Agreement.

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In 1960, journalist Wanda Jablonski reported a marked hostility toward the West

and a growing outcry against absentee landlordism in the Middle East. In his

influential book entitled The Prize: The Epic Quest for Oil, Money, and Power,

Daniel Yergin described how the Standard Oil, who controlled 75% of the US oil

business, in August 1960 with no direct warning to oil exporters, announced cut of

up 7 per cent of the posted prices of Middle Eastern crude oils. Esso and other oil

companies unilaterally reduced the posted price for Middle East crudes. Middle

Eastern countries already felt resentment towards the West over the absentee

landlordism of  MOCs who at the time controlled all oil operations within the host

countries.

Oil price decline 2014 – 2015

According to the New York Times the oil-drilling boom in the United States has

increased oil production by over 70 percent since 2008 and has reduced the United

States oil imports from OPEC by fifty per cent.

Types of crude oil

Since 2011 the United States absorbed the rapidly increased domestic production

of sweet, light, tight oil by reducing like-for-like or similar grade, imported crude

oil from Nigerian and other African suppliers. From 2011 to 2013 fifty per cent of

oil import reductions impacted light crude (API gravity35+).[15] Almost 96 per cent

of the 1.8 million barrels per day (290,000 m3/d) of its growth comes from light,

sweet crude from tight resource formations.[14] As domestic production continues to

increase, the U.S. is facing future challenges of absorbing the light, sweet tight oil.

In June 2014 crude oil prices abruptly dropped by about a third as U.S. shale oil

production increased and China and Europe's demand for oil decreased. Just before

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the United States rapidly backed out of the crude oil import market because of

booming national production, the spot price of North Sea Brent crude oil peaked

on 17 June 2014 at more than US$115 per barrel.

Nigerian oil exports (2006)

Nigeria is the largest producer of sweet oil in OPEC. By July 2014, as the US

stopped importing light sweet crude, more crude oil became available to refineries

in China, India, Japan and South Korea. They collectively purchased 42% more

Nigerian crude in 2014 compared with 2013. Starting in June 2014 Saudi Aramco

—Saudi Arabia's national oil and gas company and the world's largest oil company

in terms of production—discounted the price of its crude to Asian refineries to

compete with oil from Nigerian and other African suppliers.

In their press release 27 November 2014 at the OPEC Conference in Vienna, it was

announced that the 'OECD-Americas' was the main non-OPEC oil supply

contributor to an anticipated supply growth of 1.4 million barrels per day

(220,000 m3/d) to average 57.3 million barrels per day (9,110,000 m3/d) in 2015.

From 2011 until mid-June 2014 the annual average price of oil was about US$110

per barrel. Since June 2014 however, the price of oil slid to $US80. OPEC argued

that this drop in the price of oil was not exclusively "attributed to oil market

fundamentals." While oil market fundamentals, "ample supply, moderate demand,

a stronger US dollar and uncertainties about global economic growth" contributed

to the drop in price, "speculative activity in the oil market has also been an

important factor."

In spite of global oversupply, on 27 November 2014 in Vienna, Saudi Oil Minister

Ali al-Naimi, blocked the appeals from the poorer OPEC member states, such as

Venezuela, Iran and Algeria, for production cuts. Benchmark crude, Brent oil

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plunged to US$71.25, a four-year low. Al-Naimi argued that the market would be

left to correct itself. OPEC had a "long-standing policy of defending prices."

According to some analysts, OPEC will let price of Brent oil drop to US$60 to

slow down US shale oil production. In spite of a troubled economy in member

countries, al-Naimi repeated his statement on Saudi inaction.

By November 2014 with production at 30.56 million barrels per day

(4,859,000 m3/d) OPEC entered its sixth month of exceeding their collective target

production. By 11 December 2014 the price of OPEC Reference Basket of Crudes

had dropped to US$60.50 and by 13 December the price of Brent ICE dropped to

US$61.85. On 12 January 2015 price of OPEC Reference Basket of Crudes had

dropped to US$43.55 In February 2015, OPEC had entered its ninth consecutive

month of exceeding their collective target production.

In August 2015, Venezuela President Nicolas Maduro sought an emergency OPEC

meeting and joint coordination with Russia to stem a tumble in oil prices. Ecuador

supports Venezuela’s position.[22] Previously in February 2015, Nigeria sought to

call an emergency OPEC meeting if oil prices continued to decline. In April 2015,

Iran and Libya called on OPEC to reduce oil output. Angola and Algeria also

sought a production cut in cooperation with the African Petroleum Producers

Association. Algeria says Mexico supports the bid to cut oil output. Saudi Arabia,

though, pushed OPEC to hold production levels. In 2015, Bank of America said

that OPEC is "effectively dissolved".

J. P. Morgan estimated OPEC policy to not cut production has cost Saudi Arabia

about $90 billion/year and probably close to $200 billion/year for OPEC as a

whole.

Membership

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Current members :

OPEC has twelve member countries: six in the Middle East (Western Asia),

four in Africa, and two in South America.

Country RegionJoined OPEC[70]

Population(July 2012)[71]

Area (km²)[72]

Production(bbl/day)

 Algeria Africa 1969 37,367,226 2,381,740 2,125,000 (16th)

 Angola Africa 2007 18,056,072 1,246,700 1,948,000 (17th)

 Ecuador South America(1973)

2007[A 1]15,223,680 283,560 485,700 (30th)

 Iran

Middle

East(Western

Asia)

1960[A 2] 78,868,711 1,648,000 6,172,000 (4th)

 Iraq

Middle

East(Western

Asia)

1960[A 2] 31,129,225 437,072 3,200,000 (7th)

 Kuwait

Middle

East(Western

Asia)

1960[A 2] 2,646,314 17,820 4,500,000 (5th)

 Libya Africa 1962 5,613,380 1,759,540 2,210,000 (15th)

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Country RegionJoined OPEC[70]

Population(July 2012)[71]

Area (km²)[72]

Production(bbl/day)

 Nigeria Africa 1971 170,123,740 923,768 2,211,000 (14th)

 Qatar

Middle

East(Western

Asia)

1961 1,951,591 11,437 1,213,000 (21st)

 Saudi

Arabia

Middle

East(Western

Asia)

1960[A 2] 26,534,504 2,149,690 12,500,000 (2nd)

 United

Arab

Emirates

Middle

East(Western

Asia)

1967 5,314,317 83,600 2,798,000 (8th)

 Venezuel

aSouth America 1960[A 2] 28,047,938 912,050 2,472,000 (11th)

Total 369,368,42911,854,977 km²

33,327,700 bbl/day

Former members :

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Country Region Joined OPEC Left OPEC

 Gabon Africa 1975 1994

 Indonesia Southeast Asia 1962 2009

Some commentators consider that the United States was a de facto member during

its formal occupation of Iraq due to its leadership of the Coalition Provisional

Authority. But this is not borne out by the minutes of OPEC meetings, as no US

representative attended in an official capacity.

Indonesia left OPEC in 2009 because it ceased to be a net exporter of oil. It could

not fulfill the demand of its own country's needs, as growth in demand outstripped

output. The situation was made worse because of weak legal certainty and

corruption that deterred foreign investors from investing in new reserves in

Indonesia. In recent times, the government has increased financial incentives for

foreign firms to invest in exploration and extraction but has found itself forced to

import more supplies from the likes of Iran, Saudi Arabia and Kuwait. Indonesia's

departure from OPEC will not likely affect the amount of oil it produces or

imports.

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ASSOCIATION OF SOUTHEAST ASIAN NATIONS

(ASEAN)

The Association of Southeast Asian Nations (ASEAN ) is a political and

economic organisation of ten Southeast Asian countries. It was formed on 8

August 1967 by Indonesia, Malaysia, the Philippines,Singapore,

and Thailand. Since then, membership has expanded to

include Brunei, Cambodia, Laos, Myanmar (Burma), andVietnam. Its aims include

accelerating economic growth, social progress, and sociocultural evolution among

its members, protection of regional peace and stability, and opportunities for

member countries to resolve differences peacefully.

ASEAN covers a land area of 4.4 million square kilometres, 3% of the

total land area of the Earth. ASEAN territorial waters cover an area about three

times larger than its land counterpart. The member countries have a combined

population of approximately 625 million people, 8.8% of the world's population. In

2015, the organisation's combined nominal GDP had grown to more than

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US$2.6 trillion. If ASEAN were a single entity, it would rank as the seventh largest

economy in the world, behind the US, China, Japan, Germany, France and the

United Kingdom.

History

ASEAN was prefigured by an organisation called the Association of Southeast

Asia (ASA), a group consisting of the Philippines, Malaysia, and Thailand that was

formed in 1961. ASEAN itself was inaugurated on 8 August 1967, when foreign

ministers of five countries; Indonesia, Malaysia, the Philippines, Singapore, and

Thailand, signed the ASEAN Declaration, more commonly known as the Bangkok

Declaration. The creation of ASEAN was motivated by a common fear of

communism, and a thirst for economic development.ASEAN grew when Brunei

Darussalam became its sixth member on 7 January 1984, barely a week after

gaining independence.

Expansion and further integration[

ASEAN achieved greater cohesion in the mid-1970s following the changed

balance of power in Southeast Asia after the end of the Vietnam War. The region’s

dynamic economic growth during the 1970s strengthened the organization ,

enabling ASEAN to adopt a unified response to Vietnam’s invasion of Cambodia

in 1979. ASEAN's first summit meeting, held in Bali, Indonesia, in 1976, resulted

in an agreement on several industrial projects and the signing of a Treaty of Amity

and Cooperation, and a Declaration of Concord. The end of the Cold War between

the United States and the Soviet Union at the end of the 1980s allowed ASEAN

countries to exercise greater political independence in the region, and in the 1990s

ASEAN emerged as a leading voice on regional trade and security issues.

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On 28 July 1995, Vietnam became ASEAN's seventh member. Laos and Myanmar

(Burma) joined two years later on 23 July 1997. Cambodia was to have joined

together with Laos and Burma, but entry was delayed due to the country's internal

political struggle. The country later joined on 30 April 1999, following the

Estabilisation of its government.

In 1990, Malaysia proposed the creation of an East Asia Economic

Caucus composed of the members of ASEAN as well as the People's Republic of

China, Japan, and South Korea, with the intention of counterbalancing the growing

influence of the United States in Asia-Pacific Economic Cooperation (APEC), and

in the Asian region as a whole. The proposal failed, however, because of heavy

opposition from the US and Japan. Member states continued to work for further

integration and ASEAN Plus Three was created in 1997.

In 1992, the Common Effective Preferential Tariff (CEPT) scheme was adopted as

a schedule for phasing out tariffs, and as a goal to increase the "region's

competitive advantage as a production base geared for the world market". This law

would act as the framework for the ASEAN Free Trade Area (AFTA). AFTA is an

agreement by member nations concerning local manufacturing in ASEAN

countries. The AFTA agreement was signed on 28 January 1992 in Singapore.

After the East Asian Financial Crisis of 1997, a revival of the Malaysian proposal

was put forward in Chiang Mai, known as the Chiang Mai Initiative, which called

for better integration of the economies of ASEAN as well as the ASEAN Plus

Three countries, China, Japan, and South Korea.

The bloc also focused on peace and stability in the region. On 15 December 1995,

the Southeast Asian Nuclear-Weapon-Free Zone Treaty was signed with the

intention of turning Southeast Asia into a Nuclear-Weapon-Free Zone. The treaty

took effect on 28 March 1997 after all but one of the member states had ratified it.

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It became fully effective on 21 June 2001, after the Philippines ratified, effectively

banning all nuclear weapons in the region.

Internal market

By the end of 2015, ASEAN plans to establish a common market based upon

the four freedoms. The single market will ensure the free flow of goods, services,

investment and skilled labour and the free flow of capital.

Until end of 2010, intra-Asean trade was still low, trade was mainly exports to

countries outside the region, with the exception of Laos and Myanmar which were

ASEAN-oriented in foreign trade with 80% and 50% respectively of their exports

to other ASEAN countries.

In 2009, realised foreign direct investment (FDI) was US$37.9 billion and

increased two-fold in 2010 to US$75.8 billion. Twenty-two percent of FDI came

from the European Union, followed by ASEAN countries (16%), followed by

Japan and the US.

An ASEAN Framework Agreement on Trade in Services (AFAS) was adopted at

the ASEAN Summit in Bangkok in December 1995.[44] Under AFAS, ASEAN

member states enter into successive rounds of negotiations to liberalise trade in

services with the aim of submitting increasingly higher levels of commitment. At

present, ASEAN has concluded seven packages of commitments under AFAS.

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SOUTH ASIAN ASSOCIATION FOR REGIONAL CO-

OPERATION(SAARC)

The South Asian Association for Regional Cooperation (SAARC) is

an economic and geopolitical organisation of eight countries that are primarily

located in South Asia or the Indian subcontinent. The SAARC Secretariat is based

in Kathmandu, Nepal. The combined economy of SAARC is the 3rd largest in the

world in the terms of GDP(PPP) after the United States and China and 5th largest

in the terms of nominal GDP. SAARC nations comprise 3% of the world's area and

contain 21% (around 1.7 billion) of the world's total population and around 9.12%

of Global economy as of 2015. SAARC also home to world's 3rd & 7th largest

Economy of world in GPP(PPP) & GDP(Nominal) terms respectively as well as

World's fastest growing major Economy,that is India. India makes up over 70% of

the area and population among these eight nations. During 2005-10, the average

GDP growth rate of SAARC stood at an impressive 8.8% p.a., but it slowed to

6.5% in 2011 largely because of economic slowdown in India, which accounts for

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nearly 80% of SAARC's economy. But driven by a strong expansion in India,

coupled with favorable oil prices,from the last quarter of 2014 South Asia once

again become the fastest-growing region in the world. As of 2015 foreign

exchange reserves of SAARC nations stands at USD 411 billion]

The idea of regional political and economical cooperation in South Asia was first

raised in 2 May 1980 by Bangladesh President Ziaur Rahman and the first summit

was held in Dhaka on 8 December 1985, when the organisation was established by

the governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri

Lanka. Since then the organisation has expanded by accepting one new full

member, Afghanistan, and several observer members.

The SAARC policies aim to promote welfare economics, collective self-reliance

among the countries of South Asia, and to accelerate socio-cultural development in

the region. The SAARC has developed external relations by establishing

permanent diplomatic relations with the EU, the UN (as an observer), and other

multilateral entities. The official meetings of the leaders of each nation are held

annually whilst the foreign ministers meet twice annually. The 18th SAARC

Summit was held in Kathmandu from 26–27 November 2014.

History

The idea of co-operation in South Asia was discussed in at least three conferences:

the Asian Relations Conference held in New Delhi on April 1947; the Baguio

Conference in the Philippines on May 1950; and the Colombo Powers Conference

held in Sri Lanka in April 1954.

In the ending years of the 1970s, the seven inner South Asian nations that

included Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri

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Lanka agreed upon the creation of a trade bloc and to provide a platform for the

people of South Asia to work together in a spirit of friendship, trust and

understanding. President Ziaur Rahman later addressed official letters to the

leaders of the countries of the South Asia, presenting his vision for the future of the

region and the compelling arguments for region. During his visit to India in

December 1977, President Ziaur Rahman discussed the issue of regional

cooperation with the then Indian Prime Minister, Morarji Desai. In the inaugural

speech to the Colombo Plan Consultative Committee which met in Kathmandu

also in 1977, King Birendra of Nepal gave a call for close regional cooperation

among South Asian countries in sharing river waters. After

the USSR's intervention in Afghanistan, the efforts to established the union was

accelerated in 1979 and the resulting rapid deterioration of South Asian security

situation .Responding to the President Ziaur Rahman and King Birendra's

convention, the officials of the foreign ministriesof the seven countries met for the

first time in Colombo in April 1981. The Bangladesh's proposal was promptly

endorsed by Nepal, Sri Lanka, Bhutan and the Maldives but India and

Pakistan were sceptical initially. The Indian concern was the proposal’s reference

to the security matters in South Asia and feared thatPresident Zia Rehman's

proposal for a regional organisation might provide an opportunity for new smaller

neighbours to renationalised all bilateral issues and to join with each other to gang

up against India. Pakistan assumed that it might be an Indian strategy to organise

the other South Asian countries against Pakistan and ensure a regional market for

Indian products, thereby consolidating and further strengthening India’s economic

dominance in the region.

However, after a series of quiet diplomatic consultations between South Asian

foreign ministers at the UN headquarters in New York from August to September

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1980, it was agreed that Bangladesh would prepare the draft of a working paper for

discussion among the foreign secretaries of South Asian countries. The foreign

secretaries of the inner seven countries again delegated a Committee of the

Whole in Colombo on September 1981, which identified five broad areas for

regional cooperation. New areas of co-operation were added in the following years.

In 1983, the international conference held by Indian Minister of External

Affairs P.V. Narasimha Rao in New Delhi, the foreign ministers of the inner seven

countries adopted the Declaration on South Asian Association Regional

Cooperation (SAARC) and formally launched the Integrated Programme of Action

(IPA) initially in five agreed areas of cooperation namely, Agriculture; Rural

Development; Telecommunications; Meteorology; and Health and Population

Activities.

Officially, the union was established in Dhaka with Kathmandu being union's

secretariat-general. The first SAARC summit was held in Dhaka on 7–8 December

1985 and hosted by the President of Bangladesh Hussain Ershad. The declaration

signed by King of Bhutan Jigme Singye, President of Pakistan Zia-ul-Haq, Prime

Minister of India Rajiv Gandhi, King of Nepal Birendra Shah, President of Sri

Lanka JR Jayewardene, and President of Maldives Maumoon Gayoom.

Members

Economic data is sourced from the International Monetary Fund, current as of

April 2015, and is given in US dollars.

The first secretary general was Abul Hasan (16 January 1985 - 5 October 1989)

The first female secretary general was Fathima Dhayana Sied (Maldives) The first

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secretary general from India was Kant Kishore Bhargava (17 Oct 1989 - 31 Dec

1991)

The member states

are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri

Lanka.

SAARC was founded by seven states in 1985. In 2005, Afghanistan began

negotiating their accession to SAARC and formally applied for membership on the

same year. The issue of Afghanistan joining SAARC generated a great deal of

debate in each member state, including concerns about the definition of South

Asian identity because Afghanistan is a Central Asian country.

The SAARC member states imposed a stipulation for Afghanistan to hold

a general election; the non-partisan elections were held in late 2005. Despite initial

reluctance and internal debates, Afghanistan joined SAARC as its eighth member

state in April 2007.

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CONCLUSION

Trade barriers may occur in international trade when goods have to cross political

boundaries . A trade is a restriction on what would be free trade . The most

common form of trade barriers are tariffs , or duties , which are usually imposed or

imports . There is also a category of nontariff barrier , also known as nontariff

measures , which also serve to restrict global trade . Tariffs and other trade barriers

have definite effect on consumption and production . They serve to reduce

consumption of the imported product , because the tariff raises the domestic price

of import . They also serve to stimulate domestic production of the product when

that is possible also because of higher domestic price . The overall effect of tariffs

and trade barriers on international trade is to reduce the volume of the trade and

prices of imports .

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BIBLOGRAPHY

BOOKS REFERED

INTERNATIONAL MARKETING – MANAN

PRAKASHAN

NON- TARIFF BARRIERS – VIPUL PRAKASHAN

RESOURCE BOOK – OAS

WWW.GOOGLE.COM

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