A number of multilateral trade agreements have accelerated the pace of global integration. NAFTA has expanded trade between the United States, Canada, and Mexico. The General Agreement on Tariffs and Trade (GATT), which was ratified by more than 120 nations in 1994, has created the World Trade Organization to promote and protect free trade. In Europe, the expanding membership of the European Union is lowering barriers to trade within the region. In Asia, the expanding membership of ASEAN (Association of Southeast Asian Nations) is promoting closer economic cooperation and trade within the member southeast Asian nations.

The WTO And NAFTA

The World Trade Organization (WTO), previously known as GATT, is a 123-country organization whose objective is to promote trade among its members. These countries account for over 90 percent of world trade. There are about 20 countries from the industrialized nations of the West, including Japan, and over 100 members or associates from the less developed countries. To achieve its aim, the WTO has over the years provided a forum where countries have met to negotiate on tariffs and trade. As a result of these forums or conferences, the tariff rates for tens of thousands of items have been reduced, and a high proportion of world trade has seen an easing of restrictions.

In 1988 the United States signed the North American Free Trade Agreement (NAFTA) with Canada, the scope of which was enlarged in 1993 to include Mexico. The United States, Canada, and Mexico promote economic growth via expanded trade and investment. All three governments acknowledge that free trade will help all countries to meet the economic challenges of the future. The gradual elimination of barriers to the flow of goods, services, and investment, coupled with strong intellectual property protection, will benefit all. Canada and Mexico rank first and third as the United States’s most important trading partners (Japan ranks second).

The European Union

The European Union is composed of 27 independent sovereign countries, which are known as member states: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The European Community (EC) was established by the Treaty of Rome, which came into force on January 1, 1958. A step-by- step reduction of internal customs duties on industrial goods resulted in their complete removal by July 1, 1968. Simultaneously, the duties applied to imports from third countries were gradually aligned, and the common external tariff within the EC also came into force on July 1, 1968, and there was a target of removing all internal barriers to the movement of goods and services by 1992.

A common agricultural policy has been adopted and the removal of internal agricultural duties has been completed. The external customs duties for the majority of agricultural products, which are subject to EC regulations, were suspended and replaced by variable import levies designed to bring the price of products imported from third countries in line with those prevailing from inside the community. The community has made progress in abolishing restrictions on the movement of capital, in the alignment of taxes, and in developing a community policy on competition, and restrictive practices such as price fixing, and company mergers. In addition, EC companies have received freedom for workers from member countries to obtain employment anywhere in the community and freedom for firms to establish and operate anywhere in the community.

The Treaty of Rome also provided for links between the European Community and the colonies and other dependencies in Africa and elsewhere of France, Belgium, the Netherlands, and Italy. The first association agreement signed in 1963, known as the Yaounde Convention, which was renewed in July 1969, specified duty-free entry for industrial goods to the common market and also specified that agricultural products subject to EC market regulations and some tropical products would enjoy a slightly improved preferential treatment in the EC. The associated African states may reimpose duties or other restrictions on imports for the EC if it is necessary for their economic development.

In 1975 the EC entered into a new trade and economic cooperation agreement with 46 African, Caribbean, and Pacific countries (ACP). The agreement, known as the Lome Convention, allowed the EC duty-free access to all the industrial goods and 96 percent of the agricultural products of the ACP. This agreement was extended to 70 ACP countries. Included in this agreement was an Export Revenue Stabilization Plan through which the EC provided development assistance to the ACP countries.

The economic influence of the EC expanded to the other developed countries in western Europe as well. In 1972, when the European Free Trade Association (EFTA) members Britain, Denmark, and Ireland joined the EC, it agreed to establish a free trade area with the remaining EFTA members (Iceland, Norway, Sweden, Finland, Austria, and Switzerland). Since then the European Union has continued to expand; it has developed its own currency, the euro, and has expanded the union to include the 27 countries that form the European Union today with other countries, e.g., Croatia, the Republic of Macedonia, and Turkey recognized as potential candidate countries interested in joining the European Union.

Association Of Southeast Asian Nations

Finally, the Association of Southeast Asian Nations (ASEAN) was established in 1967 in Bangkok to accelerate economic progress and to increase the stability of the southeast Asian region. The member countries are Brunei, Malaysia, Singapore, the Philippines, Thailand, Indonesia, Myanmar (Burma), Laos, Vietnam, and Cambodia. Vietnam became the first communist country in the group when it was admitted in 1995. Cambodia and Laos were admitted to ASEAN in 1997. Myanmar was admitted in 1998. The countries have agreed to eliminate most tariffs by 2010.

The ASEAN industrial complementation program, begun in 1981, encourages member countries to produce complementary products in specific industrial sectors for preferential exchange among themselves (for example, components to be used in the automobile industry). Member countries have negotiated tariff reductions within the association and a customs code of conduct has been adopted.

Although the 10 countries of ASEAN are geographically close, they have been divided in many other respects. In mid-1987 President Corazon Aquino of the Philippines urged the association to become a real political and economic force, and it is well on its way to achieving that, with ASEAN becoming a platform upon which new expanded regional economic organizations such as Asia-Pacific Economic Cooperation (APEC) developed in the 1990s.

Bibliography:

  1. Ann Capling, “Preferential Trade Agreements as Instruments of Foreign Policy: An AustraliaJapan Free Trade Agreement and Its Implications for the Asia Pacific Region,” Pacific Review (v.21/1, 2008);
  2. Andrew Fenton Cooper, Regionalisation and Global Governance: The Taming of Globalisation (Routledge, 2008);
  3. David A. Gantz, Regional Trade Agreements: Law, Policy and Practice (Carolina Academic Press, 2008);
  4. Warren J. Keegan, Global Marketing, 4th ed. (Pearson/Prentice Hall, 2005);
  5. Kevin C. Kennedy, International Trade Regulation: Readings, Cases, Notes, and Problems (Aspen, 2009); Simon Nicholas Lester and Bryan Mercurio, Bilateral and Regional Trade Agreements: Commentary and Analysis (Cambridge University Press, 2008);
  6. Carl A. Nelson, Import/Export: How to Get Started in International Trade (McGraw-Hill, 2000);
  7. Federico Ortino and Lorand Bartels, Regional Trade Agreements and the WTO Legal System (Oxford University Press, 2006);
  8. Vern Terpstra, Ravi Sarathy, and Lloyd Russow, International Marketing (Northcoast Publishers, 2006).