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Trade Blocks, Reginal Economic Intigration

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Trade Blocks, Reginal Economic Intigration

  1. 1. Trade Policy International trade policies deal with the policies of national governments relating to export and import of various goods and services to various countries either equal terms of condition or discriminatory terms of conditions. 01/30/15 2Xavier institute- XIDAS
  2. 2. India Trade policy Trend  Till the early 1990s, India was a closed economy;  Average tariffs exceeded 200 percent,  Quantitative restrictions on imports were extensive;  There were stringent restrictions on foreign investment;  country began to cautiously reform in the 1990s;  India’s trade to GDP ratio has increased from 15 percent to 35 percent of GDP between 1990 and 2005;  India has recently signed Regional and Bilateral Trade Agreements. 01/30/15 Xavier institute- XIDAS 3
  3. 3. Objective of Int. trade policy From  To protect the domestic industry; and  To build competency of domestic industry.  To accumulate foreign exchange. To  Optimization of scare resources.  Consumer benefit.  Market Access. 01/30/15 4Xavier institute- XIDAS
  4. 4. Objective of Indian trade policy  To double the percentage share of global merchandise trade within the next five years.  To act as an effective instrument of economic growth by giving a thrust to employment generation. 01/30/15 Xavier institute- XIDAS 5
  5. 5. Protectionism Vs Free trade A/C to Adam Smith , “Free trade is the system of commercial policy which draws no restriction between domestic and foreign commodities and , therefore neither impose burden on latter, nor grants any special favor to the former”. Protectionism is the economic policy of restraining trade between states, through methods such as tariffs on imported goods, and giving subsidy to domestic industry. 01/30/15 6Xavier institute- XIDAS
  6. 6. Instrument of Int. Trade policy 01/30/15 7Xavier institute- XIDAS
  7. 7. Why Trade policy?  Political Argument National security; Protecting industry; Protecting jobs; and Retaliation;  Economic Argument Infant industry; and strategic trade policy. 01/30/15 8Xavier institute- XIDAS
  8. 8. Shift from protectionism to free Trade  Protectionism leads to inefficiency in domestic industry.  Customer are paying more price to the domestic product due to inefficiency. Hence, moving from protectionism to free trade, trade block work as a intermediary. 01/30/15 9Xavier institute- XIDAS
  9. 9. Bilateral Trade Bilateral Trade Agreements are between on two nations at a time. They are fairly easy to negotiate, and give those two nations favored trading status between each other. 01/30/15 10Xavier institute- XIDAS
  10. 10. Multilateral trade Multilateral trade agreements are between many nations at one time. For this reason, they are very complicated to negotiate, but are very powerful once all parties sign the agreement. 01/30/15 Xavier institute- XIDAS 11
  11. 11. Status of Indian Trade Agreement 01/30/15 Xavier institute- XIDAS 12 INDIA'S TRADE AGREEMENTS AT A GLANCE Existing Ongoing FTAs /PTAs under Study and Consideration • Bankok Agreement • Global System of Trade Preferences (GSTP) • SAARC Preferential Trading Agreement (SAPTA) • India-Sri Lanka FTA • India - Thailand FTA • India Singapore Comprehensive Economic Cooperation (CECA) • Indo-Nepal Trade Treaty • India-Mauritius PTA • India-Chile PTA • Indo-ASEAN CECA • South Asian Free Trade Agreement (SAFTA) • BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical & Economic Cooperation) • India - MERCOSUR PTA • Gulf Cooperation Council (GCC) • China • South Korea • Japan • Malaysia • Pakistan • Southern African Customs Union (SACU) • Egypt • Israel • Russia • Australia Source:
  12. 12. Trade Blocks 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. 01/30/15 Xavier institute- XIDAS 13
  13. 13. Level of Economic Integration 01/30/15 14Xavier institute- XIDAS
  14. 14. Complexity with integration 01/30/15 15Xavier institute- XIDAS
  15. 15. Benefit or Loss from Trade Block 01/30/15 16Xavier institute- XIDAS
  16. 16. Cont.. With no trade With trade bloc With free trade Price and Quantity Pz Q1 Pz+sa, Qz+sa Pw Trade Creation - EAB DAC Trade Diversion ADC BFC - 01/30/15 17Xavier institute- XIDAS
  17. 17. NAFTA- FTA 01/30/15 18Xavier institute- XIDAS
  18. 18. Custom Union- Andean Community 01/30/15 19Xavier institute- XIDAS
  19. 19. Common Market 01/30/15 20Xavier institute- XIDAS
  20. 20. Economic Union & Political Union 01/30/15 21Xavier institute- XIDAS
  21. 21. Thank You 01/30/15 22Xavier institute- XIDAS
  22. 22. 01/30/15 Xavier institute- XIDAS 23