Corporate and Individual Strategies to Respond to the Protectionism Worldwide
The Surging Protectionist Sentiment There is a surge of protectionism and populism worldwide. From President Trump’s Protectionist Rhetoric and his America First and Make America Great Again slogans to the rise of Anti Immigrant sentiment in Brexit Britain and the latent hyper nationalism in other countries around the world, there is a backlash against globalization. […]
Transnational Corporations and Business Continuity Programs
Transnational corporations or Multinational Companies as they are also called need to have robust and well thought out business continuity programs if they are to manage the myriad risks arising out of their business operations. MNC’s typically operate in several countries and hence the risks faced by their businesses depend on the location in which […]
The Pros and Cons of Defense Spending
There are some nations in the world who manufacture their own defense equipment. However, a majority of the countries outsource their production activity to private companies abroad. Companies like Lockheed Martin are known to extensively take contracts from foreign governments. Regardless of whether the money is spent locally or given to foreign contractors, the amount […]
Inventory Control – Inventory Audits and Cycle Counts
Any inventory of Raw materials, finished goods as well as Intermediate in process inventory has an economic value and is considered an asset in the books of the company. Accordingly any asset needs to be managed to ensure it is maintained properly and is stored in secure environment to avoid pilferage, loss or thefts etc. […]
The Globalization of Supply Chains and its Implications for Trade and Commerce
Globalization of Supply Chains and its Implications We have discussed how the globalization of the world economy has made the globe more integrated and interconnected. While this has both positive and negative effects on the way global trade and commerce takes place, there is one critical aspect that needs our attention. That is to do […]
No doubt international trade has existed spanning civilizations, in the current global economic situation no country can keep away without participating in international trade. Countries are moving cautiously away from capitalistic and protectionist outlook and engaging in trade with other countries.
With the creation of WTO, there have been constant efforts made to unite countries to create more markets, to standardize tariffs and trade laws as well as remove trade barriers in trying to create free markets.
We have seen very many bi lateral and multi lateral agreements taken place that have harmonized international trade to a large extent. Together with the agreements, several countries have begun to form unions to harmonize and free trade regulations within themselves in a bid to create free markets. One such example is the Economic Union of European Countries. Initially EU was a Customs Union that further developed into Economic Union.
Countries have also formed several other types of unions as well as zones in a bid to give impetus to international trade. We shall discuss a few of them briefly in this article.
Customs Union refers to a coming together of member countries to form a union where in they allow free trade amongst the member countries without customs duties and tariffs. However they formulate a common external trade policy to determine common import duties that are levied for imports from a third party country other than the member country.
Customs Union is the first step towards harmonizing and removing trade barriers to facilitate smoother and increased trade flow within the member groups. This would result in increased economic efficiency and improve political relationships amongst the members too paving way for further economic integration.
The Customs Union of Zollverein which was formed out of coming together of German States is another example of Customs Union. Customs Union can also be called Free Trade Zones with common Trade Tariffs and Policies.
Customs Union can also be called Free Trade Zones with common Trade Tariffs and Policies.
Customs Union is the first step towards building Economic integration that leads to formation of common markets and economic unions and federation.
Common markets allow free movement of all resources including labor, capital as well as other resources without tariffs and formalities.
Economic Union is a trade bloc, which consists of both free markets and Customs Union pwithin the member community.
Economic Unions involve close co-ordination and integration of economic and fiscal policies of the member countries
Examples: European Union, CARICOM - Single Market and Economy of Caribbean Community.
Creation of Economic Union paves way for creating a Monetary Union and further evolves into a Customs and Monetary Union.
Under this Union, member countries enjoy common economic union with free markets with no restriction on movement of goods, labor, capital and resources across member countries, common tariffs for external trade, besides combining it with a common monetary currency system.
Examples: Common Monetary and Economic Community of Central Africa.
Economic Union and Monetary Unions finally lead up to Complete Economic Integration as the final stage. In Economic Integration, the member countries operate with single currency and fiscal policy coupled with single economic policy and function as single economy.
To achieve and stabilize single economy, it necessitates the political integration, which brings into being the concept of United Countries with autonomous states governed by federal government. United States of America is the outstanding example of such integration evolving into one Nation.
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