Trading bloc
Also called: Trade bloc · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
A trading bloc is a group of countries that reduce or remove trade barriers among themselves, such as tariffs and quotas, through an agreement. Blocks are usually regional groupings. They can be shallow, like a PTA, or deep, like a customs union or common market. Members gain easier access to each other's markets. Outsiders may lose business to them.
Example
ASEAN, the EU and SAARC (through SAFTA, 2006) are trading blocs. In South Asia, intra-regional trade is only about 5% of the region's total trade, which shows a bloc can exist on paper yet stay under-used.
Don't confuse with
- Multilateral trading system: common rules through the WTO for all its members (166), not just a limited group.
Related concepts
- Stages of economic integration
- Preferential trade agreement
- Free trade agreement
- Customs union
- Common market
- Economic union
- Monetary union
- Regional economic groupings
- Regionalism
- Open regionalism