Free Trade Blocs vs Free Trade Agreements
There is a common misconception that free-trade blocs (FTBs) are the same as free trade agreements (FTAs). However, a distinction must be drawn. The former entails agreement between groups of nation-states to reduce trading barriers, whereas the latter are instruments that give effect to this agreement by lowering those trading barriers. The intention is to facilitate economic cooperation and stimulate trade.
These instruments generate strong ties between nations and facilitate their respective economic objectives – including, for example, currency stability, maintenance of employment rates, and overall economic prosperity.
Significant Free-Trade Agreements
Trans-Pacific Partnership Agreement
The TPP is a regional FTA of unprecedented scope and ambition with potential to reignite the Australian economy and see its employment sector thrive.
Australia, Canada, Japan, Malaysia, Mexico, Peru, United States, Vietnam, Chile, Brunei, Singapore and New Zealand.
With its primary goals including:
- New market access opportunities for Australian exporters of goods and services, as well as investors, that are additional to Australia’s existing FTA’s.
- A more predictable and transparent regulatory environment that offers new opportunities. The TPP will not only create a more viable environment, but also pave a path of seamless trade and investment across 12 countries by setting commonly agreed rules, laws and regulations.
Despite the extensive goals of the TPP, Australia’s largest FTA has not come without criticism. Some prominent criticisms include:
- Pundits argue that stronger Copyright protection will have the consequence of stifling creativity within the Australian Arts scene and prohibit access to material that was previously in the public domain.
- Transparency: The most forceful criticism is that the TPP lacks transparency as the negotiations have been shrouded in secrecy and negotiated outside of the public eye, without approval or consent from the democratically elected parliament.
Will the TPP live up to the government’s long reaching promises of economic prosperity? Only time will tell.
North American Free Trade Agreement (NAFTA)
Canada, Mexico and the United States
Tariffs on the majority of originating goods traded between Canada and Mexico were eliminated in 2008, with the exception of agricultural goods in the dairy, poultry, egg and sugar sectors.
NAFTA also ensures secure access for Canadian-based exporters to both the U.S. and Mexico. In this way, the agreement is acting as a mechanism for protection, whereby mimicking the processes of local content rules for the prosperity of domestic infant business’.
ASEAN Australia New Zealand (AANZFTA)
AANZFTA is the first comprehensive multilateral FTA signed by ASEAN
New Zealand, Australia, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam.
AANZFTA has ushered in a massive elimination on 99% of exports to key ASEAN markets by 2020. Moreover, the AANZFTA generated a platform for ongoing economic engagement with ASEAN through a range of built-in agendas, economic cooperation projects and business outreach activities.
ASEAN Free Trade Area (AFTA)
The Association of Southeast Asian Nations (ASEAN)
Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
With its primary objectives including:
- Accelerating economic growth, social progress and cultural development in the ASEAN region through joint endeavors in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian nations.
Efforts towards these goals
The ‘Common Effective Preferential Tariff scheme’ established a phased schedule in 1992 with the goal to increase the region’s competitive advantage as a production base geared for the world market.
There is no doubt that FTA’s between large and small scale economies facilitate free trade through breaking down pre-existing trade barriers. This complements the WTO’s primary objective of rejecting trade barriers and eliminating discriminatory treatment in international trade.
How do you think the TPP will map out for the Australian economy? Share it with us by tagging #lawpath or @lawpath.