A trade bloc refers to an intergovernmental agreement aimed at removing or significantly reducing trade barriers within member countries. A trade bloc consisting of geographically close or neighboring countries is known as an integration or regional trade agreement. A trade bloc helps to reduce or eliminate barriers to trade. It also involves discriminatory trade liberalization as it is only applicable to member countries of a given trade bloc. In this case, countries outside the trading bloc are normally discriminated against. Trade blocs could also involve deeper forms of integration. For example investment, international cooperation, capital, and labor markets, as well as monetary policy. Key global trade blocs worth of exploration include the European Union (EU), the North American Free Trade Agreement (NAFTA), and the Organization of the Petroleum Exporting Countries (OPEC).
The European Union (EU) is a political and economic union consisting of 27 member countries located mainly in Europe. All 27 members of the EU operate in a single market and are governed by the same laws. The EU’s policies are aimed at ensuring that goods, services, people, and capital move about freely. In addition, the EU policies are also aimed at maintaining common practices on agriculture, trade, and regional development. The UE is the largest trading bloc in the world. The EU, in conjunction with the World Trade Organization (WTO) seeks to ensure that various businesses in member countries have access to new markets in Europe. The EU is also charged with the responsibility of observing that the market is governed by the established rule and that all member countries abide by them. In addition, the EU endeavors to ensure that all the member countries obey them as well. Moreover, the EU plays a pivotal role in promoting sustainable trade development.
The NAFTA agreement has been signed by the government of the United States, Canada, and Mexico. The NAFTA agreement was signed on December 8, 1993 with the aim of eliminating barriers to investment and trade between Canada, the United States, and Mexico. Signing of the agreement opened trade between the three countries, effectively ending tariffs on different services and goods. In addition, the agreement was also implemented equally between the three member countries. NAFTA has facilitated the tariff-free trading of such agricultural goods as corn, meat, and eggs. Imports and exports among the three countries have also increased tremendously following the singing of the agreement, while trade deficits of member courtesy have also increased.
OPEC is an intergovernmental organization that was formed in 1960. OPEC member countries coordinate oil production policies with a view to ensuring stability in the oil market. In addition, OPEC also ensures that member countries realize a reasonable return on investment. This policy is also designed in such a manner as to ensure that oil consumers realize stable supplies of the commodity.