WTO And Trading Blocks
Since the establishment of World Trade Organization there have several rounds of talks and the last and the continuing one which is known as the Doha round, has been dogged by delays and uncertainties. In fact the world trade negotiators are having a tough time to hammer out a compromise in this respect in the face of unreasonable inflexibility displayed by the European Union countries and the USA in their attitude which has threatened the negotiations so far with collapse. The USA and the European countries are no longer ready to make any further concessions in the agricultural sphere which the other aggrieved countries have made an issue to open up their markets for industrial goods to these countries. This logjam is seriously raising the question of the effectiveness of the WTO and highlighting the need to strengthen the regional trading blocks.
Before the creation of World Trade Organization, we know the existence of several trading blocks in which contiguous geographical entities have come together to form various associations to promote the economic interests of a particular region. The instances are galore.
North American Free Trade Agreement (NAFTA), European Communities, European Union, ASEAN and our very own SAARC etc.
In January 1994, Canada, the United States of America and Mexico launched the North American Free Trade Agreement ( NAFTA) and formed the largest free trade area which is primarily designed to increase trade and investment among the trading partners. NAFTA has an ambitious agenda for tariff elimination and reduction of non-tariff barriers as well as laying down a broad framework for conduct of the business in the free trade area. The matters include regulation of investment, services, intellectual property, competition. By January 1998 the US-Canada trade became almost tariff-free! And all the trading partners started reaping the benefits progressively. NAFTA formation has led to significant biodiversity protection of th region. In order to find solutions to transport, settlement, energy and material needs which brought about significant stress on biodiversity, the NAFTA partners have responded to the challenge by agreeing to cooperate among themselves by setting up a Commission for Environmental Protection (CEC).
Improved access to NAFTA markets and the existence of clear rules on trade and investment has enhanced Canada's position as an important destination for foreign and domestic investment. Foreign direct investment into Canada form the United States of America has registered a substantial rise. Similarly Canada's corresponding investment into Mexico and the USA too has recorded a significant rise.
Another important trading block is European Union. The origin of the European integration dates back to the end of World War II which devastated Europe and prompted the search for a lasting peace and the need to bring about lasting reconciliation between France and Germany. Towards this end, one of the first initiatives was the European Coal and Steel Community (ECSC) established by the Treaty of Paris in 1951 with France and Germany joined countries like Belgium, Italy, Luxembourg and the Netherlands thus making it possible to pool their coal and steel production merging the national interests. In 1957 the six members of the ECSC formed the European Economic Community (EEC) and started the process of developing a common market for goods and services.
The Treaties of Rome created the EEC . The EEC has witnessed four stages of expansion and brings together all the leading countries of Europe which is known as European Union. The Maastricht Treaty introduced the term “European Union” in November,1993 which established new areas of European cooperation in foreign and security policy and justice and home affairs. The Treaty also set out a time-table for economic and monetary union.
While the European countries have made such significant progress in setting a well-integrated entity to promote trade and commerce their Asian counterparts too started taking the cue. The Association of South-East Asian Nations ( ASEAN) was formed in Bangkok in 1967 by the five original members which was joined by many other countries. The objectives of ASEAN are to accelerate the economic growth , social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of South East Asian nations and to promote regional peace and stability through abiding respect for justice and rule of law in the relationship among countries in the region.
The success of ASEAN inspired the creation of another association in our region which is known as South Asian Association for Regional Cooperation (SAARC) and it has objectives modelled on those of ASEAN. It is unfortunate that its progress has not been that impressive mainly due to the political differences among the countries in this region and the economic interests taking a backseat.
In the light of the continuing deadlock in the Doha round of talks the importance of multinational agreements entered in to among various trading blocks has grown than ever before. If European nations can sink their differences in the matter of politics, religion and ethnicity in forging one economic entity like European Union why the Asian countries can not succeed in this direction is very difficult to understand and defies all logic. Nearly close to 3.5 billion of people live in this part of the globe and in terms Purchase Power Parity basis the GDP value works out to almost 10 trillion and if they succeed in setting aside their political differences and display their economic wisdom they can easily challenge the supremacy of NAFTA and European Union.
Although there are signs of change in the old mindset with China effectively reforming its economy on pragmatic lines after remaining in hostage to communist dogmas for decades together and India too bringing in substantial in its outlook , a lot needs to be done in this regard.
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