. A regional trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, (tariffs & non-tariff barriers) are reduced or eliminated among the participating states. A regional trading bloc is a group of countries within a geographical region that protect themselves from imports from non-members. A trade bloc is basically a free-trade zone, or near-free-trade zone, formed by one or more tax, tariff, & trade agreements between two or more countries. The Trading blocs are a form of economic integration, & increasingly shape the pattern of the world trade. Regional trade blocks promote the trade within the block & defend its members against global competition. Defense against the global competition is obtained through established tariffs on goods produced by member states, import quotas, government subsidies, onerous bureaucratic import processes, & technical & other non-tariff barriers.
Need for Regional Trading
- Even though it is widely accepted that trading with the ROW is far more beneficial for economies, over 60 per cent of the global trade is through 200 odd regional blocs in the world. Economies are being driven towards regional trading out of domestic compulsions of looking at newer markets for their products outside domestic boundaries.
- Regional trading allows for judging of competitiveness and acceptability of domestic goods.
- It enables all the trading partners to collectively have a ‘larger’ voice in the international arena on international issues.
- Regional trading is always meant to achieve penetration of markets, increased trade and host of other objectives such as economic cooperation, jointly addressing issues of energy, environment, political consensus on global issues, etc.
- It provides for greater bonding across regions facilitating investment in economics.
- It opens economies for tourism, exchange programmes achieving greater degree of cohesion among member countries.
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