Some major regional trading blocs include the European Union (EU), the North American Free Trade Agreement (NAFTA), the Mercado Comun del Cono Sur (MERCOSUR, or Southern Common Markets (SCCM)) and the Association of Southeast Asian Nations (ASEAN). These trading blocs, while facilitating and promoting regional trade, are often also political in nature.Continue Reading
The EU, for instance, was partially borne out of a post-World War II agreement to limit the spread of communism. Its member states include Belgium, Germany, France, Luxembourg, Austria, the Netherlands and Greece.
The EU is more specifically defined as a common market trading bloc. In such a system, there are no artificial barriers whatsoever to the free trade of services, capital and labor, in addition to final goods. Common market exports therefore represent a fairly significant percentage of each country's gross domestic product of GDP.
Some other classifications of trading blocs are preferential trade areas (in which tariff barriers are specifically targeted for reduction or elimination), customs unions (in which tariff barriers are reduced or eliminated internally, while at the same time standardized for trading with non-members).
Free trade areas like NAFTA, the arrangement between Canada, the United States and Mexico, are those in which trade barriers on all goods are either reduced or eliminated by two or more countries.Learn more about Foreign Laws