Assignment on International Markets Institutions and Policies

Running head: ECONOMICS: INTERNATIONAL MARKETS INSTITUTIONS AND
POLICIES
Economics: International Markets Institutions and Policies
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ECONOMICS: INTERNATIONAL MARKETS INSTITUTIONS AND POLICIES1
Table of Contents
Regional trade agreement................................................................................................................2
North American Free Trade Agreement (NAFTA).........................................................................3
Objectives of NAFTA..................................................................................................................4
Impact of NAFTA........................................................................................................................4
Association of South East Asian Nations (ASEAN).......................................................................6
Objectives of ASEAN..................................................................................................................7
Impact of ASEAN........................................................................................................................7
References list................................................................................................................................10

ECONOMICS: INTERNATIONAL MARKETS INSTITUTIONS AND POLICIES2
Regional trade agreement
Regional trade agreements refers to a treaty by which two or more governments come to
the mutual negotiation regarding rules of regional trade. All the signatories have to follow the
trade rules specified in the agreement. The number of regional trade agreements are increasing
day by day along with a change in their nature. In 1990, globally there were fifty trade
agreements in effect. In 2017, the number increased to 280 (Lester, Mercurio and Bartels 2018).
In most trade agreement today, negotiations are limited to removal of tariff barriers rather it also
covers several policy areas controlling cross border regulations like competition policy,
procurement rules of specific government and rules governing intellectual property rights.
Figure 1: Growing number of regional trade agreement
(Source: worldbank.org 2018)
Deep trade agreements now constitute an important part of regional integration. The
agreement on free trade brings down the costs of trade and define many rules of economic
operation. An efficiently designed regional trade agreement can improvise policy cooperation

ECONOMICS: INTERNATIONAL MARKETS INSTITUTIONS AND POLICIES3
across signatories’ nations and therefore increases international trade and cross border
investment. This in turn enhances economic growth increasing social welfare (Te Velde 2017).
Two important regional trade agreement in global world are
NAFTA – North American Free Trade Agreement
ASEAN – Association of South East Asian Nations
North American Free Trade Agreement (NAFTA)
North American Free Trade Agreement is a trade bloc in North America that include
three nations such as United State, Mexico and Canada. The treaty among the three nations was
in effect on 1st January, 1994. The agreement was signed after the free trade agreement between
United States and Canada in 1988. It was a treaty that reduces or eliminates tariff and other
forms of regulatory barriers among the signatories’ nations. The industries that are mostly
affected by the concerned trade agreement were automobiles, agricultural products, textile and
pharmaceuticals. It was expected to create the largest volume of trade in the world. The
agreement was expected to bring trade among 360 million people (Nevitte 2017). The trade
agreement resolved several trade issues. These include protecting intellectual property, issues
related to environmental problem and other related problems. A special panel had been set up in
order to solve the disputes related unfair practice of trade and restriction in capital flow. NAFTA
could have included both North and South America, which would combine nearly 850 million
people with over $18 trillion people in terms of annual purchasing power. The free trade
agreement was first signed between United State and Canada in the year 1989 and later it was
extended to include Mexico in 1994. NAFTA was expected to remove all the existing barriers to