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Module IV International Economic Institutions and Agreements

The document discusses regionalism vs multilateralism in international trade. It defines regionalism as economic integration between two or more parties within a specific geographic region based on a formal agreement. Multilateralism refers to worldwide liberalization efforts, with agreements binding three or more parties. The document provides details on regional economic integration examples, effects, and advantages. It also explains multilateral trade agreements through the WTO and most favored nation treatment principle.

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30 views10 pages

Module IV International Economic Institutions and Agreements

The document discusses regionalism vs multilateralism in international trade. It defines regionalism as economic integration between two or more parties within a specific geographic region based on a formal agreement. Multilateralism refers to worldwide liberalization efforts, with agreements binding three or more parties. The document provides details on regional economic integration examples, effects, and advantages. It also explains multilateral trade agreements through the WTO and most favored nation treatment principle.

Uploaded by

tejal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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AMITY GLOBAL

BUSINESS SCHOOL Noida

Module IV International Economic


Institutions and Agreements

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AMITY GLOBAL
BUSINESS SCHOOL Noida

• Contents
• Regionalism
• Multilateralism

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AMITY GLOBAL
BUSINESS SCHOOL Noida

Regionalism vs. Multilateralism


• Regionalism is referred to the economic integration
between two or more parties based on formal
agreement. A regional free trade agreement is an
agreement among countries within a specific
geographical region.
• Multilateralism is represented by the efforts on
worldwide liberalization of international relations. A
multilateral agreement is defined as binding
agreement between three or more parties
concerning the terms of a specific circumstance.
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AMITY GLOBAL
BUSINESS SCHOOL Noida

Regionalism: Regional Economic Integration


• Regional integration agreements are economic arrangements among two
or more countries wherein countries signing the agreement agree to lower
and even eliminate barriers to trade like tariffs, quotas etc.
• Regional economic integration also termed as regionalism is a process
where countries work together with each other to lower or remove barriers
to the transnational flow of products, people, or capital for the purpose of
increasing cross-border trade and investment and raise living standards.
• The members to regional trade agreements (RTAs) opposing the principle
of most favored nation providing each other with more favourable
treatment in issues relating to trade as compared with the rest of the
world, even the WTO members.
• The objective of regionalism is to eliminate trade barriers to trade and
facilitate the cross border movement of goods and services.
• Examples- European Free Trade Area, NAFTA, SAFTA etc.

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AMITY GLOBAL
BUSINESS SCHOOL Noida

Economic Causes and Effects of Regional Economic


Integration
1.Static Effects of Regional Economic Integration
a. Trade Creation & Trade Diversion Effects
b. Demand Side Effects
c. Terms of Trade Effects
2. Dynamic Effects of Regional Economic Integration
a. Increased Competition
b. Scale Effects
c. Increased Efficiency
d. FDI
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AMITY GLOBAL
BUSINESS SCHOOL Noida

Advantages of Regionalism
• Political interest
• New markets and trade opportunities
• Socio-cultural similarities
• Growing disappointment of multilateral
trade agreements

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AMITY GLOBAL
BUSINESS SCHOOL Noida
Multilateralism: Multilateral Trade Agreements
• Multilateralism is represented by the efforts of worldwide
liberalization of international relations, which started in the
field of trade in goods under GATT.
• Multilateral trade agreements are the agreements between
three or more parties(Countries). These agreements are
intended to lower trade barriers between participating
countries.
• These agreements are considered the most effective way to
liberalize trade in an interdependent global economy.
• Examples; WTO, United Nations

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AMITY GLOBAL
BUSINESS SCHOOL Noida

Most Favoured Nation Treatment


• Most-favored-nation (MFN) status is an economic position in
which a country enjoys the best trade terms given by its
trading partner. That means it receives the lowest tariffs, the
fewest trade barriers, and the highest import quotas (or none
at all). In other words, all MFN trade partners must be treated
equally.
• All 164 members of the WTO receive most-favored-nation
status. That means they all receive the same trade benefits as
all other members. The only exceptions are developing
countries, regional trade areas, and customs unions.
• Developing countries receive preferential treatment without
having to return it, so their economies can grow.

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AMITY GLOBAL
BUSINESS SCHOOL Noida

• Advantages of Multilateralism
• Liberalization of global economy
• Increasing credibility
• Diplomatic respect
• Disadvantages of Multilateralism
• Different priorities
• Organization issues

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AMITY GLOBAL
BUSINESS SCHOOL Noida

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