The Evolution of the European Union as a Trade Bloc
The European Union is an enormous power in world trade. The huge size of its market, its experience in negotiating international trade agreements, the creation of the Single Market and the creation of the single currency-Euro have turned the European Unio
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The Evolution of the European Union as a Trade Bloc Ebru Nergiz
Abstract The European Union is an enormous power in world trade. The huge size of its market, its experience in negotiating international trade agreements, the creation of the Single Market and the creation of the single currency-Euro have turned the European Union into one of the most important trade blocs in the world. This section examines the historical development and evolution of the European Union as a trade bloc. Firstly, the concept of a trade bloc and regional economic integration are examined. In this study, the establishment of the Single Market and European Monetary Union has been evaluated. Finally the impacts of the Euro on the Single Market, the current and future strategies for the Single Market have been discussed.
10.1 Introduction The European Union was established as one of the most important trade blocs in the World. The European Union (EU) is an economic and political partnership that represents a unique form of cooperation among its 27 member states. The Union is the latest stage of a process of integration. A trade bloc can be defined as a ‘preferential trade agreement’ (PTA) between a subset of countries, designed to significantly reduce or remove trade barriers within member countries. When a trade bloc comprises of neighboring or geographically close countries, it is referred to as a ‘regional trade (or integration) agreement’. It is sometimes also referred to as a ‘natural’ trade bloc to underline that the preferential trade is between countries that have presumably low transport costs or trade intensively with one another. The two principal characteristics of a trade bloc are that: (1) it E. Nergiz (&) Gelisim University, Cihangir Mahallesi, Sehit Piyade Onbasi Murat Sengoz Sok.No:8 Avcilar, 34310 Istanbul, Turkey e-mail: [email protected]
H. Dincer and Ü. Hacioglu (eds.), Globalization of Financial Institutions, DOI: 10.1007/978-3-319-01125-7_10, Springer International Publishing Switzerland 2014
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implies a reduction or elimination of barriers to trade, and (2) this trade liberalization is discriminatory, in the sense that it applies only to the member countries of the trade bloc, outside countries being discriminated against in their trade relations with trade bloc members. Trade blocs can also entail deeper forms of integration, such as international competition, investment, labor and capital markets (including movements of factors of production), monetary policy, etc. The integration of countries into trade blocs is commonly referred to as ‘regionalism’, irrespective of whether the trade bloc has a geographical basis or not (Bhagwati and Panagariya 1996). The world economy after World War II has become much more integrated. Eight successive rounds of negotiations under the General Agreement on Tariffs and Trade (GATT) have resulted in significant global trade liberalization and there has been an accelerating trend toward regional integration in every part of the world (Evans et al. 2004)
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