International Trade: Major Trade Blocs and Their Impact on Global Trade - EU, USMCA, BRICS, Slides of International Business

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z

International Business Management

• EU

• USMCA

• BRICS

3 Major Trade

Blocs of the

World

By

M.Harikrishnan

z Trade Bloc - Meaning

 A trading bloc is a formal agreement between two or more

regional countries that remove trade barriers between the

countries in the agreement.

 The idea is that member countries freely trade with each other,

but establish barriers to trade with non-members , which has had

a significant impact on the pattern of global trade.

z EUROPEAN UNION ( EU )

 The EU is the world’s largest trading bloc consisting 27 member states that are

located primarily in Europe.

 The 27 EU member states are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech

Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,

Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland,

Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.

 As a political entity, the European Union is represented in the World Trade

Organization (WTO). 19 member states have joined a monetary union known as the

Eurozone , which uses the Euro ( € ) as a single currency.

 The euro is the second largest reserve currency as well as the second most

traded currency in the world after the United States dollar. The European Central

Bank (ECB) is the central bank for the eurozone, and thus controls monetary policy in

that area with an agenda to maintain price stability.

z List of the 10 largest trading partners of the European Union

 With United Kingdom withdrawal from the European Union, United Kingdom

enters the top ten partners of the EU-27.

 The 10 largest trading partners of the European Union with their total trade

(sum of imports and exports) in millions of euro for calendar year 2020 are as

follows.

 In the table, a positive trade balance means that the EU exports more than it

imports from the given country. These figures do not include foreign direct

investment or trade in services, but only trade in goods.

z The EU and India - an analysis in 2020  (^) The EU is India's third largest trading partner , accounting for €62,8 billion worth of trade in goods in 2020 or 11.1% of total Indian trade, after China (12%) and the US (11.7%).  (^) The EU is the second-largest destination for Indian exports ( 14% of the total) after the USA.  (^) India is the EU’s 10th largest trading partner , accounting for 1.8 % of EU total trade in goods in 2020 , well behind China (16.1),the USA (15.2%), and the UK (12.2 %).  (^) Trade in goods between the EU and India increased by 72% in the last decade.  (^) Trade in services between the EU and India reached €32.7 billion in 2020.  (^) The EU's share in foreign investment inflows to India doubled from 8% to 18% in the last decade.  (^) EU foreign direct investment stocks in India amounted to €75.8 billion in 2019, which is significant but way below EU foreign investment stocks in China (€198.7 billion) or Brazil (€318. billion).  (^) Approximately 6,000 European companies are present in India , providing directly 1.7 million jobs and indirectly 5 million jobs in a broad range of sectors.

z North American Free Trade Agreement (NAFTA) / United States - Mexico - Canada Agreement (USMCA)

 The Agreement between the United States of America, the United Mexican States,

and Canada, commonly known as the United States–Mexico–Canada Agreement

(USMCA) in the United States and the Canada–United States–Mexico Agreement

(CUSMA) in Canada, is a free trade agreement between Canada, Mexico, and the

United States.

 It replaced the North American Free Trade Agreement (NAFTA) implemented in 1994,

and is sometimes characterized as "NAFTA 2.0", or "New NAFTA“ , since it largely

maintains or updates many provisions from its predecessor.

 The USMCA came into effect on July 1, 2020, replacing the NAFTA.

z USMCA’s Imports and Exports - from and to India (Individually) US Canada Mexico 0 10 20 30 40 50 60

2.75 3. Imports from India ( in US $ Billion) Exports to India ( in US $ Billion) USMCA Member countries In US $ Billions

z BRICS (Brazil Russia India China South Africa)

 The BRICS members are known for their significant influence on regional affairs.

 Since 2009, the governments of the BRICS states have met annually at formal

summits.

 Russia hosted the most recent 12th BRICS summit on 17 November 2020 virtually

due to the COVID-19 pandemic.

 Originally the first four were grouped as "BRIC" (or "the BRICs") before the induction

of South Africa in 2010.

 The BRICS have now formed a BRICS Bank , a Contingent Reserve Arrangement

and even a Think Tank Council.

z India’s Role in BRICS  (^) India, since the inception of BRICS has played an important and active role. It attaches high importance to the BRICS forum for promoting global economic growth, peace and stability.  (^) Co-operation on the economic front is one of the focus areas of India's policy towards BRICS. India sees BRICS as a platform to build multilateral relations with Latin American, African and Asian countries. India has over the years, developed closed strategic relationship with the other member countries.  (^) India has also tried to use BRIC as a forum to resolve the age-old mistrust and complicated relationship with China.  (^) India has also played an important role in the setting up of New Development Bank. Also for India, co-operation with the BRICS is very important in terms of addressing its food and energy security issues, and combating terrorism.  (^) With most of its member countries registering slowing of their economies, India has emerged as the only bright light in the BRICS thanks to its recent policy reforms. Despite global economic slowdown, Indian rupee has become the best performing currency among BRICS countries.

Other Major Trade Blocs

z References  (^) https://en.wikipedia.org/wiki/European_Union#Politics  (^) https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_European_Union  (^) https://ec.europa.eu/trade/policy/countries-and-regions/countries/india/  (^) https://en.wikipedia.org/wiki/United_States%E2%80%93Mexico%E2%80%93Canada_Agreement  (^) https://edition.cnn.com/2019/12/10/politics/nafta-us-mexico-canada-trade-deal-differences/index.html  (^) https://www.statista.com/statistics/186525/volume-of-us-exports-of-trade-goods-to-india-since-1985/ & https://www.statista.com/statistics/187683/volume-of-us-imports-of-trade-goods-from-india-since-1985/  (^) https://tradingeconomics.com/canada/imports/india#:~:text=Canada%20imports%20from%20India%20was,updated% on%20May%20of% & https://tradingeconomics.com/canada/exports/india#:~:text=Canada%20exports%20to%20India%20was,updated%20on %20May%20of%  (^) https://tradingeconomics.com/india/exports/mexico & https://tradingeconomics.com/mexico/imports-from-india  (^) https://en.wikipedia.org/wiki/BRICS  (^) https://pib.gov.in/Pressreleaseshare.aspx?PRID=