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Trade Agreements

Free Trade Area

Customs Union Common Market

Economic Union

Political Integration

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Nations make an agreement for trade in one

or multiple set of commodities

Initiated for the common advantage ofmember countries.

Eg.ECSC

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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

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Gulf Cooperation Council (GCC) China South Korea

Japan Malaysia Pakistan Southern African Customs Union (SACU) Egypt

Israel Russia Australia

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Indo-ASEANCECA

South Asian Free Trade Agreement (SAFTA)

BIMSTEC (Bay ofBengal Initiative for Multi-Sectoral Technical & Economic Cooperation)

India - MERCOSUR PTA

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Tariifs among the member countries will be

abolished, but each member maintains its

own external tariffs againstNon-membercountries.

As against Trade Agreements, FTA include alarge number of commodities

NAFTA, SAFTA, ANCERTA are examples ofFTA

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The member countries not only abolish all

internal tariffs but formulate a common

policy external tariff. Eg.Andean Pact

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It abolishes the restrictions on mobility of

factors of production in addition to the

common tariff structure Eg.CARICOM

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It is a common market in which the macro-

economic and regulatory policies are

harmonized. It is the highest form of economic integration

Eg.European Union

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It aims at having a single political authority

The European Union is moving in this

direction.

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Trade Creation and Trade diversion

Economies of Scale

Effect on competition Improved Terms of Trade

Effect on Investment

Effect on Capital Mobility

Effect on Fiscal and Monetary Policies

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The European Coal and Steel Community

(ECSC) was formed on July 25th, 1952. among

Belgium, France, West Germany, Italy,Luxemburg, andNetherlands for the free

export and import of steel and coal amongthe six nations.

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There is an agreement between Australia and

New Zealand ( AustraliaNew Zealand Closer

Economic Relations Trade Agreement) forthe removal of all tariff and non-tariff

restraints on all traded goods and services,harmonization of standards and conformance

procedures, freedom from anti-dumpingpenalties, and agreement not to distort bi-

lateral trade with subsidies.

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There is an agreement among USA, Canada andMexico (NAFTA -North American Free Tradeagreement) for removal barriers in agricultural export,

removal of export subsidies, right for investors toreceive national treatment and rights to have anti-dumping penalties reviewed.

The South Asian Free Trade Area (SAFTA) agreement

was made in January 2004, among SAARC countriesnamely, India,Nepal, Pakistan, Bangladesh, Bhutanand Maldives to have zero customs duty for trade inany commodity among the member nations by 2012.

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As per the Andean Pact between Bolivia ,

Ecuador, Peru, Columbia and Venezuela ,

these countries maintain a common tariffpolicy towards external countries.

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The Caribbean Community and Common

Market (CARICOM) is aimed at creating a

common market by integrating membereconomies, co-coordinating the foreign

policies and increasing functionalcooperation in areas of social and human

development.

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Documents

Economic Integration 1