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NAFTA

The North American Free Trade Agreement is an agreement signed


by Canada, Mexico,

and

the United

States,

creating

trilateral rules-

based trade bloc in North America. The agreement came into force on
January 1, 1994. It superseded the CanadaUnited States Free Trade
Agreement between the U.S. and Canada. NAFTA has two supplements:
the North American Agreement on Environmental Cooperation (NAAEC) and
the North American Agreement on Labor Cooperation (NAALC).
In terms of combined purchasing power parity GDP of its members, as of
2013 the trade bloc is the largest in the world as well as by nominal GDP
comparison. The goal of NAFTA was to eliminate barriers to trade and
investment between the U.S., Canada and Mexico. The implementation of
NAFTA on January 1, 1994 brought the immediate elimination of tariffs on
more than one-half of Mexico's exports to the U.S. and more than one-third
of U.S. exports to Mexico.

APEC
Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific
Rim member economies that seeks to promote free trade and economic
cooperation throughout the Asia-Pacific region. It was established in 1989 in
response to the growing interdependence of Asia-Pacific economies and the
advent of regional trade blocs in other parts of the world; to fears that highly
industrialized Japan (a member of G8) would come to dominate economic
activity in the Asia-Pacific region; and to establish new markets for
agricultural products and raw materials beyond Europe (where demand had
been declining). APEC works to raise living standards and education levels
through sustainable economic growth and to foster a sense of community
and an appreciation of shared interests among Asia-Pacific countries. APEC
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includes newly

industrialized

economies,

although

the

agenda

of free

trade was a sensitive issue for the developing NIEs at the time APEC
founded, and aims to enable ASEAN economies to explore new export market
opportunities for natural resources such as natural gas, as well as to seek
regional economic integration (industrial integration) by means of foreign
direct investment. Members account for approximately 40% of the world's
population, approximately 54% of the world's gross domestic product and
about 44% of world trade.

GATT
The General Agreement on Tariffs and Trade (GATT) was a multilateral
agreement regulating international trade. According to its preamble, its
purpose was the "substantial reduction of tariffs and other trade barriers and
the elimination of preferences, on a reciprocal and mutually advantageous
basis." It was negotiated during the United Nations Conference on Trade and
Employment and was the outcome of the failure of negotiating governments
to create the International Trade Organization (ITO). GATT was signed in
1947, took effect in 1948, and lasted until 1994; it was replaced by the World
Trade Organization in 1995.

European Union
The European

Union (EU)

is

a politico-economic union

of

28 member

states that are primarily located in Europe. The EU operates through a


system

of supranational independent

and intergovernmental negotiated

decisions

by

institutions
the

member

states.

Institutions of the EU include the European Commission, the Council of the


European Union, the European Council, the Court of Justice of the European
Union, the European Central Bank, the Court of Auditors, and the European
Parliament. The European Parliament is elected every five years by EU
citizens.
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The

EU

traces

its

origins

from

the European

Coal

and

Steel

Community (ECSC) and the European Economic Community (EEC), formed by


the Inner Six countries in 1951 and 1958, respectively. In the intervening
years, the community and its successors have grown in size by the accession
of new member states and in power by the addition of policy areas to its
remit. The Maastricht Treaty established the European Union under its
current name in 1993 and introduced the European Citizenship. The latest
major amendment to the constitutional basis of the EU, the Treaty of Lisbon,
came into force in 2009.
The EU has developed a single market through a standardized system of laws
that apply in all member states. Within the Schengen Area, passport controls
have been abolished. EU policies aim to ensure the 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.

MAQUILADORA
In Mexico,

a maquiladora (Spanish

a manufacturing operation

in

a free

trade

pronunciation: or maquila is
zone,

where factories import

material and equipment on a duty-free and tariff-free basis for assembly,


processing, or manufacturing and then export the assembled, processed
and/or manufactured products, sometimes back to the raw materials' country
of origin.
In 1964, the Bracero Program, which allowed Mexican agricultural workers to
work legally in the U.S. on a seasonal basis, came to an end. Less than a
year after the end of the Bracero Program, the Mexican Government
launched the Border Industrialization Program (BIP) or the Maquiladora
Program, to solve the problem of rising unemployment along the border. The
maquiladoras became attractive to the US firms due to availability of cheap
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labor, devaluations of peso and favorable changes in the US customs laws. In


1985, maquiladoras overtook tourism as the largest source of foreign
exchange, and since 1996 they have been the second largest industry in
Mexico behind the petroleum industry.

SEATO
The Southeast Asia Treaty Organization (SEATO) was an international
organization for collective

defense in Southeast

Asia created

by

the Southeast Asia Collective Defense Treaty, or Manila Pact, signed in


September 1954 in Manila, Philippines. The formal institution of SEATO was
established on 19 February 1955 at a meeting of treaty partners in Bangkok,
Thailand. The organization's headquarters were also in Bangkok. Eight
members joined the organization.
Primarily created to block further communist gains in Southeast Asia, SEATO
is generally considered a failure because internal conflict and dispute
hindered general use of the SEATO military; however, SEATO-funded cultural
and educational programs left long-standing effects in Southeast Asia. SEATO
was dissolved on 30 June 1977 after many members lost interest and
withdrew.

IMF
The International Monetary Fund (IMF) is an international organization that
was initiated in 1944 at the Bretton Woods Conferenceand formally created
in 1945 by 29 member countries. The IMF's stated goal was to assist in the
reconstruction of the world's international payment system postWorld War
II. Countries contribute funds to a pool through a quota system from which
countries with payment imbalances temporarily can borrow money and other
resources. As of the 14th General Review of Quotas in late 2010 the fund
stood at SDR476.8bn, or about US$755.7bn at then-current exchange
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rates. Through this fund, and other activities such as surveillance of its
members' economies and the demand for self-correcting policies, the IMF
works to improve the economies of its member countries.

Objectives of IMF
IMF seeks to achieve the following objectives:
i.

To promote international monetary cooperation.

ii.

To facilitate the expansion of international trade.

iii.

To ensure stability to foreign exchange rates.

iv.

To reduce disequilibrium in the international balance of payments of


member countries.

v.

To promote capital investment in backward and underdevelopment


countries.

vi.

To assist in the establishment of a multinational system of payments in


respect of current transactions between the member countries.

vii.

To secure multilateral convertibility (i.e., to convert the currency of any


member into the currency of any other member).

viii.
ix.

To provide short term monetary help to members during emergency.


To achieve balanced economic growth and high level of employment in
member countries.

World Bank
The World Bank is a United Nations international financial institution that
provides loans to developing countries for capital programs. The World Bank
is a component of the World Bank Group, and a member of the United
Nations Development Group. The World Bank's official goal is the reduction of
poverty. According to its Articles of Agreement, all its decisions must be
guided

by

commitment

investment and international

to

trade and

the
to

the

promotion
facilitation

of foreign
of capital

investment.

Objectives of World Bank


1. To provide long-run capital to member countries for economic
reconstruction and development.
2. To induce long-run capital investment for assuring Balance of Payments
(Bop) equilibrium and balanced development of international trade.
3. To provide guarantee for loans granted to small and large units and other
projects of member countries.
4. To ensure the implementation of development projects so as to bring
about a smooth transference from a war-time to peace economy.
5. To promote capital investment in member countries by the following ways;
(a) To provide guarantee on private loans or capital investment.
(b) If private capital is not available even after providing guarantee, then
IBRD provides loans for productive activities on considerate conditions.

International Trade Organization


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The International Trade Organization or ITO was the proposed name for an
international institution for the regulation of trade.
Led by the United States in collaboration with allies, the effort to form the
organization from 1945-1948, with the successful passing of the Havana
Charter, eventually failed due to lack of approval by the US Congress. Until
the creation of the World Trade Organization in 1994, international trade was
managed through GATT.

Main Objectives of International Trade


Organization
i.
ii.
iii.

To ensure the reduction of tariffs and other barriers to trade.


To eliminate discriminatory treatment in international trade relations.
To facilitate higher standards of living, full employment, a growing volume of real
income and effective demand and an increase in production and trade in good and

iv.

services of the member nations.


To make positive effect, which insures developing countries especially the least
developed secure level of share in the growth of international trade that reflects the

v.
vi.

needs of their economic development.


To facilitates the optimal use of the worlds resources for sustainable development.
To promote an integrated, more visible and durable trading system incorporating all
the resolutions of the Uruguay Rounds Multi literal trade negotiations.