Trading blocs and agreements, the advantages of specific trading agreements

Trading blocs are countries in regions that manage and encourages trade doings. These lead to trade liberalisation and trade creation among members.  The World Trade Organisation authorises trading blocs if the outcome is lower protection against foreign countries that survived before trading blocs were introduced. (tutor2u, 2019)

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There are different types of trading blocs, these include free trade area, customs union, preferential trade area, economic union and common market. Some major trading blocs in the world include ASEAN, EU, NAFTA and many more.

Free trade areas are made when countries in the same region decide to decrease or remove trading barriers on goods that come from other members. Customs Union includes the elimination of tariff barriers with members and the approval of a mutual external tariff against non-members, members might convert as a single bloc with third parties, this may be with other trading blocs or the world trade organisation.  The preferential trade area is when countries in a geographical area decide to cut or remove tariffs on some goods that are imported from others in the geographical area. This is the first step to creating a trading bloc. The economic union is when the level of addition is more advanced, integration is advanced by introducing a single currency and mutual economic policy through a dominant bank. (McEvoy, J, 2019) The final type of trading bloc I am going to discuss is the common market, this happens when other countries trade easily in all economic resources, as a result of this all the trading barriers on goods, services, capital and labours are eliminated and non-tariffs are limited. Some mutual rules that affect industries are Common Agricultural Policy, Common Fisheries Policy of the European Single Market. (economicsonline, 2019)

 

The Singapore and United States FTA has been around from 2004. They have a lot of other FTAs with countries such as Australia, Japan, China, South Korea and many more. The country is a member in the Regional Comprehensive Economic Partnership and a member in the Comprehensive and Progressive Agreement for Trans Pacific Partnership. (export.gov, 2019) Singapore is a part of the ASEAN trading bloc, this is a trade bloc with 10 countries with a collective economic size of $2.3 trillion. ASEAN has many FTAs with some key economies, these are AANZFTA, ACEFTA, AIFTA, AKFTA and AJCEP. The purpose of these FTAs is to encourage businesses in ASEAN to trade locally and globally without tariff barriers, businesses operating in ASEAN can get easier access to export markets at lower costs. (aseanbriefing, 2019) there are many different trading blocs all different sizes, the EU took many years before they got a trading agreement with Canada. Trading blocs give consumers more choice.

(asean.usmission, 2019)

The single market signifies the EU as one land without internal borders to the free movement of goods and services. The single market inspires competition and trade. It lowers costs, improves productivity and increases quality. The European single market has driven economic growth and as a result makes businesses lives easier. (ec.europa, 2019)

 

The increase of free movement in the EU is an important factor in making internal markets and these enable the free movement of capital, goods, services and people.  The Maastricht Treaty in 1992 works on the freedom of workers movement.  (ukandeu, 2019)

Singapore Trade	Last	Previous	Highest	Lowest	Unit
Balance of Trade	3833.90	3771.70	8077.24	-1999.81	Million SGD
Current Account	21497.50	21617.80	24780.60	-659.20	SGD Million
Current Account to GDP	17.70	16.00	26.10	-13.10	percent
Imports	40431.78	40358.48	44689.59	266.38	Million SGD
Exports	44265.67	44130.18	48730.89	197.68	Million SGD
External Debt	2080866.80	2043894.40	2080866.80	854184.00	SGD Million
Terms of Trade	100.69	99.17	174.30	96.67	Index Points
Capital Flows	53513.20	9376.80	53513.20	-5008.50	SGD Million
Tourist Arrivals	1734903.00	1801365.00	1801365.00	147954.00
Gold Reserves	127.40	127.40	127.40	0.00	Tonnes
Terrorism Index	0.00	0.00	0.00	0.00
Foreign Direct Investment	39895.40	37893.00	39895.40	-4441.60	SGD Million

(tradingeconomics, 2019)

(thebalance, 2019)


A benefit of free trading agreements is that it plays a part in better economy activity and creating jobs in which gives smaller business the opportunity to gain the advantages of better trade and savings. Trading agreements reduce and remove tariffs to ensure a smooth flow of goods and services, and this improves the e-commerce. Free trade agreements gives both the business itself and the customers a greater access to a bigger range of products so they can therefore identify what products are the best in the competitively priced goods and services. Free trade agreement can give business trade and investment chances which can increase the economic growth. (dfat, 2019)

There are many advantages of trading agreements for Singapore, the EU-Singapore trade agreement offers many benefits for Singapore, especially the smaller businesses, these include less heavy practical rules, preventing testing for certain types of products and tax actions and guidelines of origin that enable trade. The trade agreement makes sure that all Singapore and Europe investors are treated equally and do not receive ant discrimination. (ec.europa, 2019)