Regional grouping

Regional grouping

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  REGIONAL GROUPING BY:-HIMANSHU RAWAT ENROLLMENTNUMBER :- G181342291 ROLL NUMBER :- 18134110099
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  REGIONAL GROUPINGS –MEANING  Regional Economic Groups (or Regional Groups) are the associations of countries situated in a particular region whereby they come to a common understanding regarding rules and regulations to be followed while exporting and importing goods among them. Such groups have liberal rules for member countries while a separate set of rules is laid for non-members. For example, the European Union (EU), the Association of South-east Asian Nations (ASEAN). These groups are popularly known as Trading Blocs.  Economic Regionalisation can be viewed as one of the major instruments of promoting international trade activities among countries through removal of barriers to mutual trade in goods and services by means of free trade areas, customs union and other preferential trade arrangements. Further, linkages may be stimulated through freer international exchanges of capital and labour.  When two or more countries come together to form a regional trade grouping, that will have two types of effects. The first is the trade creating effect, which will increase the national income in the participating countries. The second will be the trade diversion effect, meaning a resulting change in the direction of trade activities in favour of the member countries and against non-members. This actually implies disadvantages and losses on the part of the non-member countries. For this reason, the formation of trading bloc is very important issue not only for the signatory countries but also for the non-member countries.
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   Economic Groupingof the countries of the same region or areas increases the size of market, aggregate demand for products and services, overall, productivity, employment and ultimately economic activity of the region. At the same time, people of the region get a variety of products at comparatively lower prices. The number of regional groups has grown rapidly in recent decades. More than one-third of world trade now takes place within such groups. Within the framework of the globalisation efforts conducted under, first, the General Agreement on Tariffs and Trade (GATT) and second, the World Trade Organisation (WTO), the utmost importance was given to the principle of non- discrimination at the international and national levels. The first principle is known as the most-favoured nation (MFN) clause and requires that any trade concession extended to a country must be automatically and immediately applied to all other GATT/WTO members. The second principle requires all the members to treat imported goods in the same manner as domestic products. Additionally, custom duties must be the only tools to protect domestic goods. Although, these two very basic principles were agreed under the GATT/WTO, there are, indeed, some effective exceptions to these rules. One exemption from the most-favoured nation clause is the case of free trade areas and customs union. Only in these economic groupings is ‘discrimination’ made permissible against the non- member countries. Another exception to the principle of non-discrimination is the special status of the developing countries. Trade preferences extended to the developing are also excluded from the MFN Clause. In other words, preferential treatment extended to the developing countries will not be granted compulsorily to the other countries.  Although trade liberalisation efforts at the global level are accelerating even day by day, regional economic groupings or regional trade blocs are also gaining momentum as indispensable forms of increasing trade amongst the countries, developed or developing, to satisfy, their growth and development aspirants.
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   Although tradeliberalisation efforts at the global level are accelerating even day by day, regional economic groupings or regional trade blocs are also gaining momentum as indispensable forms of increasing trade amongst the countries, developed or developing, to satisfy, their growth and development aspirants.  At the level of developed countries, the European Union (EU), the North American Free Trade Agreeement (NAFTA) and the Asia Pacific Economic Co-operation (APEC) have created huge economic blocs. These three blocs are very important in terms of both their weights in the world trade and economy and their inherent tendencies towards further enlargement and deepening.
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  Features Of RegionalTrade Blocs
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  South Asian FreeTrade Area (SAFTA)
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  IMPACT OF TRADEBLOCS IN GLOBALISATION