Trade Blocs in International Marketing - European Union What is a trade bloc? Why they are formed? Trade blocs around the world Types of trading bloc / Levels of economic integration Trade Bloc - EU Benefits and Challenges of EU

1. Trade Blocs in International Marketing
Group 12
Hardik Sampat - 45
Nikhil Jamnare - 19
Amit Maisheri - 29
European Union

2. Agenda
•What is a trade bloc? Why they are formed?
•Trade blocs around the world
•Types of trading bloc / Levels of economic integration
•Trade Bloc -EU
•Benefits and Challenges of EU

3. • Intergovernmental agreement, where regional barriers to trade, (tariffs and non-
tariff barriers) are reduced or eliminated among the participating states
• A regional trading bloc is a group of countries within a geographical region that
protect themselves from imports from non-members. Trading blocs are a form of
economic integration, and increasingly shape the pattern of world trade
• Primary objective is regional integration which enables them to take advantage of
geographical proximity as well as the enlarged market formed after such mergers
• Starts with reduction of barriers to trade between the member states, but the
deeper objective of many such blocs is to integrate their economies
What is a trade bloc? Why they are formed?

4. Trade blocs around the world

5. • Preferential Trade Area
• Free Trade Area
• Customs union
• Single market
• Economic union
• Economic and monetary union
• Complete economic integration
Types of trading bloc / Levels of economic integration

6. • Founded in 1951 by six neighboring states Germany, France,
Italy, Belgium, Netherlands, and Luxembourg
• Initially named as European Coal and Steel Community
(ECSC)
• Evolved into European Economic Community, then European
Community and, in 1992, was finally transformed into
European Union
• Regional block with largest number of members states (28)
• World’s largest trading bloc, and second largest
economy, after USA
European Union (EU)

7. • Initial aim was to create a single market for goods, services,
capital, and labour by eliminating barriers to trade and
promoting free trade between members
• In terms of dealing with non-members, common tariff barriers
were erected against cheap imports, such as those from Japan,
whose goods prices were artificially low because of the
undervalued yen
• European Union (EU) is a politico-economic union
• EU policies aim to ensure free movement of people, goods,
services, and capital, enact legislation in justice and home
affairs, and maintain common policies on trade, agriculture,
fisheries, and regional development
European Union (EU)

8. Benefits of EU
• European harmony- Europe has managed to heal the divisions
which were so painfully exposed in the World War –II. EU was
awarded the Nobel Peace Prize in 2012 for helping to promote peace
and international co-operation.
• Free trade within the bloc- Free trade and removal of non-
tariff barriers have helped reduce costs and prices for consumers.
• Market access and trade creation- Easier access to each
other’s markets & high cost domestic producers to be replaced by
lower cost, and more efficient imports.
• Flexible Economy- Free movement of labour and capital have
helped create a more flexible economy & the immigration of workers
helped to fill labour market shortages.
• Protection- Firms inside the bloc are protected from cheaper
imports from outside, such as cheap imports from China and
Vietnam.

9. Problems/Challenges of EU
• Loss of benefits- The benefits of free trade between countries
in different blocs is lost.
• Distortion of trade-Trading blocs are likely to distort world
trade, and reduce the beneficial effects of specialization and the
exploitation of comparative advantage.
• Inefficiencies and trade diversion- Inefficient producers
within the bloc can be protected from more efficient ones outside
the bloc.
• Unemployment- due to prolong recession.
• Prolonged Fall in GDP- Economic stagnancy
• More bureaucracy less democracy- EU has created extra
layers of bureaucracy whilst taking away decision making process
further from local communities.

10. Thank You