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Wednesday, June 6, 2012

Regionalization .....................Lessons for south Asia

The term globalization is often used to explain the worlds current level of free trade. The creation of the General Agreement on Tariff and Trade (GATT) at the end of the Second World War marked the beginning of the lowering of barriers between nations, which in turn has resulted in increased openness in trade. But while the notion of free trade, in principal, seems to be beneficial for all parties involved, the deadlock over the Doha Round of WTO demonstrates the difficulties the world faces in reaching an agree meant. The new reality of free trade is a move towards Regional Trading Agreements (RTAs) and Free Trade Agreements (FTAs). Trading blocs have now emerged in nearly every part of the world. Nations are not part of such agreement are generally considered to be at a disadvantage during multilateral trade negotiations.

The argument for regional blocs stems from the fact that the task of gaining consensus among WTO members is often complex and time consumi ng. Efforts at regional economic integration [like EU and ASEAN] differ in that they comprise smaller group of nations-ranging from several countries as many as 30 or more. The benefit of trying to eliminate trade barriers in smaller group of countries is that it can be easier to gain consensus from fewer members as opposed to, say, the 151 countries that comprise the WTO Greater specialization, increased efficiency, greater consumption and higher standards of living for all should result from higher levels of trade between member nationals of a trading bloc. There can also be political benefits from efforts toward regional economic integration. A group of nations can have significantly greater political weight than each nation has individually. Thus the group as a whole can have more say when negotiating with other countries in forums such as the WTO. This is one of the reasons economic blocs have emerged in Africa as well as South America. Perhaps, the greatest non-trade c ontribution trading blocs can make is in relation to reducing the potential for military conflict between member nations. Infarct peace was the drive of early efforts at integration in Europe in 1950s. The devastation in Second World War caused Europe to see integration as one way to preventing further armed conflicts.

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