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- Blocs 3 2 3 As A Fraction
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- Types of Trading Blocs
- Trading Blocs Examples
- Advantages of Trading Blocs
- Disadvantages of Trading Blocs
Trading Bloc Definition
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A trading bloc is a formal agreement between two or more regional countries that remove trade barriers between the countries in the agreement while keeping trade barriers for other countries.
Types of Trading Blocs
1. Free Trade Area
Two or more countries form a Free Trade Area in which trade barriers between the countries are abolished but each country maintains its own tariffs against non-member countries. For example, the North American Free Trade Agreement (NAFTA) between the USA, Canada & Mexico created a free trade area.
2. Customs Union
A Customs Union is like a free trade area except that member countries maintain a common tariff against non-member countries.
3. Common Market
A Common Market is like a customs union but there is a free flow of factors of productions between the countries. For example, no permits are required to work in another member country.
4. Economic Union
An Economic Union has the same benefits as a common market but there is a common tax system and employs the same currency. For example, the European Union is an economic union.
Trading Blocs Examples
– North American Free Trade Agreement (NAFTA)
– European Economic Area (EEA)
– Union of South American Nations (Unasur/Unasul)
– European Economic Area (EEA)
– Union of South American Nations (Unasur/Unasul)
1. Trade Creation
Eliminations of trade barriers for member countries increase domestic production and consumption. The more efficient producer produces, leading to less wastage of scarce resources. This is trade creation.
2. Trade Diversion
When a trade bloc is formed, an external tariff maybe be applied to non-member countries, making some goods that were initially cheaper, now more expensive. Thus, the member country may start importing from other member countries since the price becomes artificially cheaper than buying from the previous non-member country. This leads to trade diversion.
Advantages of Trading Blocs
1. Size of Market
An increase in foreign direct investment results from trade blocs and benefits the economies of participating nations. It increases local investments since the trading bloc increases the overall size of markets for firms.
2. Technology
Open trade leads to faster transfer of technology across borders.
3. Economic Leverage
Increases economic leverage for the trading bloc as a whole. The larger markets created via trading blocs permit economies of scale. The average cost of production is decreased because mass production is allowed.
Disadvantages of Trading Blocs
1. Loss of Sovereignty
A trading bloc is likely to lead to at least partial loss of sovereignty for its participants. For example, the European Union now not only deals not only with trade partnerships, but also with human rights, consumer protection and greenhouse gas emissions.
2. Interdependence
Because trading blocs increase trade among participating countries, the countries become increasingly dependent on each other.
- By RFE/RL's Tajik Service
Russia and its Central Asian allies have launched two days of talks in the Tajik capital to discuss the situation in Afghanistan a month after Taliban militants entered Kabul and seized power in the war-torn country.
Leaders of the Russian-led Collective Security Treaty Organization (CSTO) met for a summit in the Tajik capital on September 16, to be followed a day later by a gathering of the Shanghai Cooperation Organization (SCO), which includes China.
The talks come as Moscow and Beijing move to assert themselves as key players in the region following the rapid collapse of the Western-backed government in Kabul at the end of a 20-year-old U.S.-led military mission in Afghanistan.
Both regional security blocs have been viewed as Moscow's and Beijing's counters to U.S. geopolitical dominance.
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With Afghanistan facing a looming major humanitarian crisis in the aftermath of the Taliban's takeover, Afghanistan’s Central Asian neighbors are wary of the security threats emanating from the war-torn country and the potential for tens of thousands of refugees to pour over the border.
Russian President Vladimir Putin, who was forced to join via video conference after self-isolating because of close contact with several people in his inner circle who tested positive for COVID-19, and other leaders of CSTO member states, which include Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan, kicked off the diplomatic talks in Dushanbe.
The leaders “agreed to fortify the CSTO’s southern borders and continue to plan and implement a package of measures aimed at bringing down the level of and neutralizing potential threats in the organization’s space,' Tajik President Emomali Rahmon said after the talks, according to TASS.
Meanwhile, the office of Kazakh President Qasym-Zhomart Toqaev said he 'supported the joint CSTO position that the placement of Afghan refugees or foreign military bases on our countries' territories is unacceptable.'
At a presummit meeting on September 15, CSTO Secretary-General Stanislau Zas acknowledged that the situation on the Tajik-Afghan border was 'unfavorable,' and pledged that Dushanbe would be provided with 'all the necessary military and military-technical assistance' to combat any threat from the south.
In recent weeks, the security grouping held military exercises in Kyrgyzstan to prepare for any possible trouble. Tajikistan conducted military maneuvers with Russia and Uzbekistan, while Uzbekistan also held separate drills with Russia along the Uzbek-Afghan border.
The CSTO has scheduled three more sets of military maneuvers close to the Tajik-Afghan border in October, with a fourth scheduled for November.
Russia has military bases in the former Soviet republics of Tajikistan and Kyrgyzstan.
Leaders from the eight-member SCO are then due to hold talks in Dushanbe on September 17.
Founded in 2001, the SCO initially consisted of China, Russia, Kyrgyzstan, Kazakhstan, Tajikistan, and Uzbekistan before India and Pakistan joined in 2017.
Putin, who is self-isolating due to 'all-day' exposure to a close contact who tested positive for the coronavirus, cancelled his attendance at the two summits.
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi will also participate in the SCO meeting virtually.
Iranian President Ebrahim Raisi, whose country is an observer member of the SCO and keen to join the grouping, will attend the gathering.
Before heading to Dushanbe, Raisi said that Tehran's participation in the SCO meeting shows that 'regional cooperation is a top priority for us.'
Pokemon generations download pc. Afghanistan holds observer status at the SCO, but Russian Foreign Minister Sergei Lavrov said on September 15 that the Taliban had not been invited to observe proceedings in the Tajik capital.
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'Nobody is hurrying to give full recognition to the Taliban,' Lavrov said.
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The Taliban has sought to reassure neighboring countries and Russia that it poses no threat since gaining control last month over almost all of Afghanistan’s territory, including Kabul, the capital.
The hard-line Islamist group also promised inclusiveness and a general amnesty for former opponents, but many Afghans remain deeply fearful, especially after the group formed an all-male government led by hard-line veterans, banned protests, and cracked down on demonstrators and journalists.
Lavrov said he 'welcomed' several Taliban promises, including on curbing drug-trafficking and preventing attacks on other countries, but added: 'Now we are monitoring to see how it will be fulfilled in practice.'
Tensions between CSTO member states also surfaced during the September 16 talks, with Kyrgyz President Sadyr Japarov proposing to 'draw up mechanisms for rapid response and decision-making within the [CSTO] in case of armed conflict” between member states, according to his press service.
The proposal follows deadly ethnic clashes that erupted earlier this year near a disputed segment of the Kyrgyz-Tajik border.