Regional trading blocs

Countries establish trading blocs because they believe free trade benefits their consumers by providing higher quality at lower cost. Such blocs tend to be regional because it is easier to come to an agreement with a few neighbors than with many remote partners. Small companies face challenges when their home markets open up to external competition and their native competitors become even bigger.

Regional trading blocs

Download this article in PDF format Abstract Upon Eritrean independence inEthiopia became landlocked and therefore dependent on neighbors — especially Djibouti — for access to international markets.

Previewing the main argument, this article shows how Ethiopia was able to anticipate dangers and opportunities linked to growing involvement of Gulf Arab States in the ports of the region, and how it embarked on an expeditionary foreign policy mission Regional trading blocs the Gulf specifically in the UAE in order to steer investment towards the port town where Addis Ababa could derive the most strategic advantage — Berbera in semi-autonomous Somaliland.

These have coincided with various actions taken by Horn of Africa states to affect the regional distribution of power to their advantage. It is the development of the port of Berbera, in particular, that may prove the most radical in terms of challenging regional power dynamics as well as international law.

Of the three ports, Berbera is closest to Ethiopia proper and offers the potential of opening up the vast, albeit isolated eastern region of Ethiopia to trade, particularly in the export of livestock and agriculture.

Regional Trading Blocs – Advantages

However, the port is located in the Republic of Somaliland, which declared its independence from the Republic Regional trading blocs Somalia in but remains unrecognized internationally, therefore representing a political and legal headache for states wishing to engage with it substantively.

While developments involving recent ports deals have received scant attention by area specialists they have potentially wide-ranging consequences. What commentary that does exist overwhelmingly focuses on foreign involvement; it sees events as being externally driven and controlled, denying agency to the Horn of Africa states even though they are the actors with the largest stake in the course of events Ulrichsen, ; Burke, ; Lefebvre, This omission is most striking in relation to Ethiopia, an aspiring regional power with considerable strategic interests in which regional ports are developed and by whom.

Lastly, we trace and analyse the actions Ethiopia took to advance its interests and counter potential threats. Hierarchy in the Horn and Ethiopian Aspirations The view that regions should be treated as the critical unit of analysis in international politics gained greater prominence after the Cold War.

Regional trading blocs

Given the intense security interaction between Ethiopia, Eritrea, Djibouti and Somalia, the Horn of Africa forms a region under this interpretation. These are measured in terms of demographic size, economic capacity and military prowess.

Regional trading blocs

Third, they must have political aspirations to dominate neighbours or at least be the leader in regional matters if domination is not attainable Genrewold, ; 5. In purely material terms, but also relative to its neighbours, Ethiopia has a good claim to be a regional power.

First, with a population somewhere close to million it is demographically much larger than its neighbours. In sum, the distribution of power capabilities within the Horn of Africa overwhelmingly favours Addis Ababa.

But what of its aspirations for leadership?

Deepening African Integration: Intra-Africa Trade for Development and Poverty Reduction

It has fought wars with both Somalia and Eritrea, and Eritrea is aligned with anti-Ethiopia factions in Somalia Genrewold, ; Being the seat of the African Union AU confers some influence on Addis Ababa regionally, but its legitimacy as a leader is undermined by its internal troubles, which include high levels of poverty, ethnic conflict, and food insecurity Dehetz, There will always be a considerable gap between its aspirations and its ability to act as regional power so long has it has a high level of dependency on one neighbour to access international waters.

Due to lower transaction and transportation costs, ports also serve as nodes for production and manufacturing. Conversely, landlocked developing countries are at a major disadvantage Paudel, ; Faye, et al.

The lack of direct sea access inhibits integration with the global economy and entails a transport cost disadvantage compared to states with sea access. Also, the fact that trade from a landlocked country must pass through a sovereign transit country in order to access international shipping markets creates a serious political vulnerability on the former.

If a landlocked country and its transit neighbour are in conflict, either military or diplomatic, the transit neighbour can block borders, implement regulatory changes that impede trade, or simply increase tariffs.

Even when there is no direct conflict, landlocked countries are extremely vulnerable to the political vagaries of their transit neighbours.Introduction.

The recent intensification of involvement in the Horn of Africa’s coastal zone by the Gulf Arab States1 has led to the surge in development activities at ports in the region. These have coincided with various actions taken by Horn of Africa states to affect the regional .

1. Explain and use correctly concepts and terms associated with regional integration. Explanation of the following terms and concepts related to regional integration. Historic trading blocs include the Hanseatic League, a Northern European economic alliance between the 12th and 17th centuries, and the German Customs Union, formed on the basis of the German Confederation and subsequently the German Empire from Surges of trade bloc formation occurred in the s and s, as well as in the s after the collapse of Communism.

REGIONAL TRADING BLOCS: A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, (tariffs & non-tariff barriers) are reduced or eliminated among the participating states.

A regional trading bloc is a group of countries within a geographical region that. The traditional approach to regional trade arrangements. The traditional economic approach to regional trade integration assumes perfect competition in markets and is concerned with the implications of forming a region for the allocation of resources in a static sense.

Stanford Libraries. A trade bloc is a type of intergovernmental agreementoften part of a regional intergovernmental organizationwhere barriers to trade tariffs and blocs are reduced or trade among the participating states.

The Effect of Regional Trading Blocs on Small Companies |