Trading Blocs
European Union (EU)
In 1951, after the Second World War, the European Union (EU) was founded by six countries. Those countries were France, Germany, Italy, Belgium, Luxembourg, and the Netherlands, however there are currently twenty-seven member states, nine candidate countries, and one potential candidate. It costs £15 billion a year to be a member of the EU. The Treaties of Rome were signed in Rome, Italy, on 25th March 1957, and came into effect in 1958, which are considered the foundation acts of the European Community.
Most EU countries use one single currency – the Euro (€) - launched in 1999 - which makes it easy to trade across countries. As well as this, the Schengen border-free area allows people and products to move freely without border checks since 1985, underpinning the EU’s free movement principle. This allows any EU citizen to work, travel, and live in any EU country without special formalities. There are also four non-EU countries a part of this area: Norway, Liechtenstein, Switzerland, and Iceland.
Most EU countries export between 50% to 80% of their goods to other countries in the EU, and it is the world’s largest exporter of manufactured goods and services. It accounts for around 14% of the world’s trade in goods.
Member States:
Austria (since 1995)
Belgium (since 1958)
Bulgaria (since 2007)
Croatia (since 2013)
Cyprus (since 2004)
Czechia (since 2004)
Denmark (since 1973)
Estonia (since 2004)
Finland (since1995)
France (since 1958)
Germany (since 1958)
Greece (since 1981)
Hungary (since 2004)
Ireland (since 1973)
Italy (since 1958)
Latvia (since 2004)
Lithuania (since 2004)
Luxembourg (since 1958)
Malta (since 2004)
Netherlands (since 1958)
Poland (since 2004)
Portugal (since 1986)
Romania (since 2007)
Slovakia (since 2004)
Slovenia (since 2004)
Spain (since 1986)
Sweden (since 1995)
United Kingdom (1973-2020)
Countries Using the Euro:
Austria
Belgium
Croatia
Cyprus
Estonia
Finland
France
Germany
Greece
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Portugal
Slovakia
Slovenia
Spain
EU Core Commitment Areas:
Political leadership to prevent and end conflict
Upholding the norms that safeguard humanity
Leave no one behind
Catalysing action to achieve gender equality
Changing people’s live: from delivering aid to ending needs
Commit to accelerate the reduction of climate related risks
Invest in humanity
Support the education platform
Mission Statement:
“To guarantee peace, freedom and security in and around Europe.”
United States-Mexico-Canada Agreement (USMCA)
The United States-Mexico-Canada Agreement (USMCA) entered into force in 2020, substituting the North America Free Trade Agreement. This agreement creates a more balanced, reciprocal trade supporting high paying jobs for Americans, growing the North American economy. It creates a more level playing field for American workers, benefits farmers, ranchers, and agribusinesses by modernising and strengthening the trade of food and agriculture, and supports the economy.
Members:
United States
Mexico
Canada
USMCA Trade & Investment Summary (taken from website)
U.S. goods and services trade with USMCA totaled an estimated $1.8 trillion in 2022. Exports were $789.7 billion; imports were $974.3 billion. The U.S. goods and services trade deficit with USMCA was $184.6 billion in 2022.
U.S. goods exports to USMCA in 2022 were $680.8 billion, up 16.0 percent ($94.1 billion) from 2021 and up 34 percent from 2012. U.S. goods imports from USMCA totaled $891.3 billion in 2022, up 20.5 percent ($151.5 billion) from 2021, and up 48 percent from 2012. U.S. exports to USMCA account for 33.0 percent of overall U.S. exports in 2022. The U.S. goods trade deficit with USMCA was $210.6 billion in 2022, a 37.5 percent increase ($57.4 billion) over 2021.
U.S. exports of services to USMCA were an estimated $109.0 billion in 2022, 23.6 percent ($21 billion) more than 2021, and 17 percent greater than 2012 levels. U.S. imports of services from USMCA were an estimated $83.0 billion in 2022, 27.0 percent ($17.6 billion) more than 2021, and 66 percent greater than 2012 levels. Leading services exports from the U.S. to USMCA were in the travel, professional and management services, and financial services sectors. The United States has a services trade surplus of an estimated $26.0 billion with USMCA in 2022, up 14.0 percent from 2021.
U.S. foreign direct investment (FDI) in USMCA (stock) was $569.0 billion in 2022, a 9.5 percent increase from 2021. U.S. direct investment in USMCA is led by manufacturing, nonbank holding companies, and finance and insurance.
USMCA's FDI in the United States (stock) was $623.1 billion in 2022, up 8.0 percent from 2021. USMCA's direct investment in the U.S. is led by finance and insurance, manufacturing, and depository institutions.
Association of Southeast Asian Nations (ASEAN)
The Association of Southeast Asian Nations (ASEAN) was established in 1967 in Bangkok, Thailand. The founding countries of ASEAN are Indonesia, Malaysia, Philippines, Singapore, and Thailand, who all signed the ASEAN declaration on 8th August. The trading bloc generated a PPP of around $10.2 trillion in 2022 constituting approximately 6.4% of global GDP. The primary objectives are "to accelerate economic growth, social progress and cultural development in the region", and "to promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter”.
ASEAN engages with other supranational entities in the Asia-Pacific region and other parts of the world. It is a major partner of the UN, SCO, PA, GCC, MERCOSUR, CELAC, and ECO. It maintains a global network of relationships that is widely regarded as the central forum for cooperation in the region.
Members:
Indonesia (since 1967)
Malaysia (since 1967)
Philippines (since 1967)
Singapore (since 1967)
Thailand (since 1967)
Brunei (since 1984)
Vietnam (since 1995)
Laos (since 1997)
Myanmar (since 1997)
Cambodia (since 1999)
The Pacific Alliance
In 2011, Chile, Columbia, Mexico, and Peru created The Pacific Alliance. The Pacific Alliance is the eighth economic power and eighth export force worldwide. In Latin America and the Caribbean, the block of countries represents 38% of the GDP, 50% of total trade, and attracts 45% of the FDI. Its objectives are:
Build in a participatory and consensual way an area of deep integration to move progressively towards the free mobility of goods, services, resources and people.
Drive further growth, development and competitiveness of the economies of its members, focused on achieving greater well-being, overcoming socioeconomic inequality and promoting the social inclusion of its inhabitants.
Become a platform of political articulation, economic and commercial integration and projection to the world, with emphasis on the Asia-Pacific region.
Members:
Chile
Colombia
Mexico
Peru
The population of those countries is mainly a young and qualified labour force with consumers who's purchasing power is constantly growing. The Lima Declaration established as the general purpose of the Pacific Alliance, to move towards the free mobility of goods, services, capital, and people. It prioritises the movement of businesspeople and the facilitation of migratory transit. In November 2012, Mexico announced the abolition of visas for nationals of Colombia and Peru, since Chilean nationals did not require visas to enter Mexico. The facility granted by Mexico is extremely broad and includes any unpaid activity. In May 2013, Peru announced the abolition of visas for businesspeople from Chile, Colombia and Mexico up to 183 days provided they carry out an unpaid activity in the country. With these decisions, the member countries of the Pacific Alliance adopted a mobility for people who enter their territories for up to six months, if the activities they perform are of an unpaid type, such as tourist travel, transit or business. In May 2016, they removed 92% of tariffs.
Southern Common Market (MERCOSUR)
The Southern Common Market (MERCOSUR) was established by Argentina, Brazil, Paraguay, and Uruguay in 1991, through signing the Treaty of Asunción. This created the Southern Common Market, boosting the movement of goods and people. They were joined by Venezula later. Its main objective is to promote a common space that generates business and investment opportunities through the competitive integration of national economies into the international market. MERCOSUR’s origins are linked to the treaty that established the Latin American Free Trade Association in 1960, which was succeeded by the Latin American Integration Association in the 1980s.
In 2023, MERCOSUR had generated a nominal annual GDP of around $5.7 trillion, placing the bloc as the 5th largest economy in the world. The bloc places high on the HDI.
Members:
Argentina (since 1991)
Brazil (since 1991)
Paraguay (since 1991)
Uruguay (since 1991)
Venezuela (since 2012, but was suspended in 2016 due to human rights record)
Southern African Development Community (SADC)
From 1977, active consultations were undertaken by representatives of Angola, Botswana, Lesotho, Mozambique, Swaziland, United Republic of Tanzania and Zambia, working together as Frontline States, culminating in a meeting of Foreign Ministries of the Frontline States in Gaborone, Botswana, in May 1979, which called for a meeting of ministers responsible for economic development.
That meeting was subsequently convened in Arusha, Tanzania, in July 1979. The Arusha meeting led to the birth of the Southern African Development Co-ordination Conference (SADCC) a year later.
SADCC was officially formed on 1st April, 1980 comprising of all the majority ruled states of Southern Africa, Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Zambia and Zimbabwe. The Heads of States and government of the Frontline States and representatives of the governments of Lesotho, Malawi, and Swaziland signed the Lusaka Declaration “Towards Economic Liberation” in Lusaka, Zambia and thus SADCC was born.
The SADCC was subsequently formalised by means of a Memorandum of Understanding on the Institutions of the Southern African Development Coordination Conference dated 20th July 1981.
In 1989, the Summit of Heads of State or Government, meeting in Harare, Zimbabwe, decided that SADCC should be formalised to “give it an appropriate legal status … to replace the Memorandum of Understanding with an Agreement, Charter or Treaty.”
On August 17 1992, at a Summit held in Windhoek, Namibia, the Heads of State and Government signed the SADC Declaration and Treaty that effectively transformed the Southern African Development Coordination Conference (SADCC) into the Southern African Development Community (SADC). SADC was established under Article 2 of the SADC Treaty by SADC Member States represented by their respective Heads of State and Government, or duly authorised representatives, to spearhead economic integration of Southern Africa. The objective also shifted to include economic integration following the independence of the rest of the Southern African countries.
On 14 August 2001, in Blantyre, Malawi, the SADC Heads of State and Government signed an Agreement Amending the 1992 SADC Treaty to establish the Regional Indicative Strategic Development Plan.
Members:
Angola
Botswana
Comoros
Democratic Republic of Congo
Eswatini
Lesotho
Madagascar
Malawi
Mauritius
Mozambique
Namibia
Seychelles
South Africa
Tanzania
Zambia
Zimbabwe
Asia-Pacific Economic Cooperation (APEC)
Asia-Pacific Economic Cooperation (APEC) was established in 1989 by Australia, Brunei, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States. They ensure that goods, services, investment, and people move easily across borders. Members facilitate this trade through faster customs procedures at the border, more favourable business climates behind, and aligning regulations and standards across the region. To summarise, products can be exported. All economies in APEC have an equal say in decision making, and they don't have to abide by treaty obligations or take on any binding commitments. Four core committees and their respective working groups will provide recommendations to APEC leaders, leading to final decisions.
APEC economies have adopted the WTO MFN mechanism for all their unilateral trade liberalisation commitments. It is not a trade bloc. This means that it requires members to accord the most favourable tariff and treatment to all other WTO so that no nation is more favoured.
Members:
Australia (since 1989)
Brunei (since 1989)
Canada (since 1989)
Chile (since 1994)
Hong King (since 1991)
China (since 1991)
Indonesia (since 1989)
Japan (since 1989)
South Korea (since 1989)
Malaysia (since 1989)
Mexico (since 1993)
New Zealand (since 1989)
Papua New Guinea (since 1993)
Peru (since 1998)
Philippines (since 1989)
Russia (since 1998)
Singapore (since 1989)
Taiwan (since 1991)
Thailand (since 1989)
United States (since 1989)
Vietnam (since 1998)
Mission Statement:
“We are united in our drive to build a dynamic and harmonious Asia-Pacific community by championing free and open trade and investment, promoting and accelerating regional economic integration, encouraging economic and technical cooperation, enhancing human security, and facilitating a favorable and sustainable business environment. Our initiatives turn policy goals into concrete results and agreements into tangible benefits.”
South Asian Association for Regional Cooperation (SAARC)
In 1985, the South Asian Association for Regional Cooperation was established. The Secretariat of the Association was set up in Kathmandu, Nepal in 1987. The EU has an observer status in SAARC since 2006, together with Australia, China, Iran, Japan, South Korea, Mauritius, Myanmar, and the United States. The EU has an observer status in SAARC since 2006, together with Australia, China, Iran, Japan, South Korea, Mauritius, Myanmar, and the United States.
The objectives of the Association are to promote the welfare of the peoples of South Asia and to improve their quality of life; to accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potentials. SAARC also aims to strengthen cooperation with other developing countries and to cooperate with international and regional organizations with similar aims and purposes.
Initially, SAARCS primary focus was on technical cooperation, agriculture, environment, meteorology, communications, education, health and population activities, culture and sports, prevention of drug abuse and trafficking, tourism, transport, science and technology, rural development, and women’s development. The final goal was intended to reach towards SAFTA to form a free trade area in South Asia with a favourable treatment towards the LDCs.
SAARC makes up 5.21% of the global economy.
Members:
Afghanistan (since 2005)
Bangladesh (since 1985)
Bhutan (since 1985)
India (since 1985)
Maldives (since 1985)
Nepal (since 1985)
Pakistan (since 1985)
Sri Lanka (since 1985)
African Continental Free Trade Area (AfCFTA)
The African Continental Free Trade Area (AfCFTA) was established in 2018 with 43 parties and another 11 signatories, making it the largest free trade area by number of member states, after the World Trade Organisation (WTO). It has the largest population (1.3 billion) and geographic size. The African Union brokered the agreement that founded the AfCFTA, and that was signed by 44 of its 55 member states in Rwanda on March 21st. Members are committed to eliminating tariff and non-tariff barriers on most goods and services, creating a single market, facilitating the free movement of people and labour etcetera.
Members:
Algeria (since 2021)
Angola (since 2020)
Botswana (since 2019)
Burkina Faso (since 2019)
Burundi (since 2021)
Cameroon (since 2020)
Central African Republic (since 2020)
Cape Verde (since 2020)
Chad (since 2018)
Ivory Coast (since 2018)
Comoros (since 2018)
Republic of the Congo (since 2019)
Democratic Republic of the Congo (since 2022)
Djibouti (since 2019)
Egypt (since 2019)
Equatorial Guinea (since 2019)
Eswatini (since 2018)
Ethiopia (since 2019)
Gabon (since 2019)
Gambia (since 2019)
Ghana (since 2018)
Guinea (since 2018)
Guinea Bissau (since 2022)
Kenya (since 2018)
Lesotho (since 2020)
Liberia (since 2023)
Malawi (since 2020)
Mali (since 2019)
Mauritania (since 2019)
Mauritius (since 2019)
Morocco (since 2022)
Mozambique (since 2023)
Namibia (since 2019)
Niger (since 2018)
Nigeria (since 2020)
Rwanda (since 2018)
Sahrawi Arab Democratic Republic (since 2019)
São Tomé and Príncipe (since 2019)
Senegal (since 2019)
Seychelles (since 2021)
Sierra Leone (since 2019)
Somalia (since 2018)
South Africa (since 2019)
Tanzania (since 2022)
Togo (since 2019)
Tunisia (since 2020)
Uganda (since 2018)
Zambia (since 2021)
Zimbabwe (since 2019)
Regional Comprehensive Economic Partnership (RCEP)
The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement among the Asia-Pacific countries Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. The 15 members account for 30% of the world’s population and 30% of global GDP, making it the largest trade bloc in history. It was launched at the 2012 ASEAN summit. India can opt in at any time.
Taken from Wikipedia:
Trade between RCEP members in 2022 revealed post-pandemic trade dynamics and reflected the increasing integration that the RCEP intended to create. The Asia Global Institute reports that in 2022, trade between RCEP members increased by 8 percent, lagging behind trade between RCEP members and non-RCEP members with an increased 8.6% growth in trade. All members experienced a rebound in trade post Covid-19, arriving at pre-Covid trade levels by 2023.
Raw materials, such as salt, nickel, and chemicals, significantly increased in trade between RCEP members. This could be a result of both China and Indonesia being members, with China being the lead importer of nickel and Indonesia being the lead global exporter. This is also representative of the Electric Vehicle industry prevalent within RCEP members. There was a dramatic increase in tobacco exports within RCEP members of 150% in 2022, with China individually experiencing a 900% growth of exports.
Members:
Australia (since 2021)
Brunei (since 2021)
Cambodia (since 2021)
China (since 2021)
Indonesia (since 2022)
Japan (since 2021)
South Korea (since 2021)
Laos (since 2021)
Malaysia (since 2022)
Myanmar (since 2021)
New Zealand (since 2021)
Philippines (since 2023)
Singapore (since 2021)
Thailand (since 2021)
Vietnam (since 2021)
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade and economic integration agreement that evolved from the Trans-Pacific Partnership, which was never ratified due to the withdrawal of the United States. The agreement to establish the CPTPP was signed on 8 March 2018 The agreement to establish the CPTPP was signed on 8 March 2018 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, with the ceremony held in Santiago, Chile. The agreement specifies that its provisions enter into effect 60 days after ratification by at least half the signatories (six of the eleven participating countries). On 31 October 2018, Australia was the sixth nation to ratify the agreement; it subsequently came into force for the initial six ratifying countries on 30 December 2018.