The Future Prospect of European Union and Similar Other Unions - Essay Example

Regional trade blocs are continuously increasing and have the objective of improving trade relations between the different countries so that different economies can trade with one another without any problem. Emerging and developing economies are witnessing a spurt in the growth of trade blocs as it has helped to ease business and improve relations. It has been identified that nearly all countries are part of some or the other trading blocs and accounts for over one third of the world trade that takes place between the countries present in the trading block. This has strengthened the manner in which business is carried out and has helped to bring about a change in the manner transactions takes place among different economies. One of the prime reasons for developing trade blocs is to ensure that trading barriers are reduced and the process of trade which takes between nations is facilitated. The creation of trading blocs has helped to remove the intra-bloc trade of goods and also helps to ensure non-tariff barriers between the different member countries through which liberalization and development of different policies have taken place. This paper looks to evaluate the manner in which European Union has been created, the different issues which the union faces while carrying out different transactions and the future prospect of European Union and similar other unions. This will thereby help to understand the role that trading blocs have played and the manner in which it has strengthened the overall working of organizations. European Union is a political and economic union where 27 have come together to carry international trade between them so that the different trade barriers which are present among economies can be reduced. The European Union came into existence after World War II and since then has looked towards improving the prosperity and development of the region by ensuring stable trade among economies. The reason for the creation of European Union was that the different countries which are a part of the Union share a similar sovereignty and promote independence so that they can prosper in different fields like of nuclear, coal, steel and other areas (Lamy, 2002). The development of the trade union further widened the different activities which were carried by the European Union. The union started to work as a single unit where goods, people, and capital move freely, a common trade policy, a common agricultural policy, many aspects of social and environmental policy, and a common currency has been adopted (Baldwin, Forslid and Haaland, 2006). The process has increased the interdependence of one economy on another and also has brought a shift in the manner different rules were applicable while dealing with different economies. The development of the European Union and similar other unions has provided an opportunity where the focus has been shifted towards promoting trade between economies and developing strategies which reduces the gaps between economies. The process has helped in harmonizing law and creating a joint policy statement where economies look to pool the resources so that overall effectiveness can be increased and business opportunities can be grown. The integration of trade, agriculture, education and environment has helped to deal with different critical issues which were otherwise out of the purview of economies. The European Union also gives all its members equal rights and all the decisions which are taken are taken jointly by all the 27 members so that the future prospect doesn’t gets affected (Gordon, Rimmer and Arrowsmith, 2008). This stance has helped to look towards a policy of intergovernmental decision making where importance is laid on every factor and the overall relevance of different area is monitored and analyzed so that the process of decision making improves trade relations and provides an opportunity to grow and multiply the business. The model on which European Union works is different from other trading blocs. Trading blocs in the 1960’s and 70’s worked on a strategy of closed regionalism but European Union has moved a step ahead and look to boost international trade by controlling the business and developing ways which results in import-substitution. This has resulted in reducing the reliance on external agencies and has made the business self sufficient thereby ensuring that the different needs are easily met within the union. European Union in its early days also looked to have a policy of import-substitution to protect it member countries from external players but with the strengthening of the union and the growth of the members a more open policy which is aimed towards international trade between different nations have been adopted. This has helped to increase the volume of trade which takes place not only among the member countries but other countries as well (Levy, 2005). The process has helped to strengthen the union and also has made the economy to become resistant to external agencies thereby creating an opportunity through which long term business gains and growth opportunities can be achieved. The creation of trading bloc like the European Union has reduced quotas and tariffs which have thereby helped to grow the business. It is true that in the process of reducing tariffs and quotas some of the poor economies had to suffer as the removal of protectionism and dealing with competition has impacted the economic growth to a high level. Despite it proper policies and governing has helped the developing and emerging economies to deal with the situation in a better way and has helped to develop a path where better trade relations have fostered (Tan, 2004). The reduction in the rules which were applicable among the member countries has increased the level of business which was taking place and has multiplied the pace at which free flow of goods and services, investment and ideas was previously taking place (Hanson, 2006). The process has changed the entire style of working and created wide opportunities where the union looks to bargain for all the economies especially while dealing with external players so that the economies are protected and are able to get a good return for the different dealings which take place. The ease with which operations can be carried out now has helped to multiply the different opportunities which were present and has acted as one of the important determinant which has transformed the entire process of carrying out different activities. The creation of trading blocs has helped all economies which includes both developing and developed economies to create an environment where the focus is on developing business for the future. The process has led towards all economies being treated at par with one another and has helped to formulate a culture where working together and sharing the different resources have maximized efficiency in their operations (Hoekman and Braga, 2007). This has helped to increase the level of trade which takes among the different member countries and has helped economies to focus on their area of expertise so that a framework through which overall development becomes possible can be identified. This has helped to transform the style of working and brought better efficiency in the working culture. The strength of the European Union is derived from the fact that the different member countries which are part of the union adopt a common policy, undertake joint actions and pursue coordinated strategies. Working together and looking to develop the union has helped to strengthen their stance before the world and has also provided an opportunity through which better foreign policies have been developed so that a framework which looks at development of the economies is looked at (Bilal, 2008). The process has simplified the manner in which quotas and tariffs which acted as an obstacle to be removed. This has helped economies to shed their old and traditional view of protectionism to a more open policy where through international competition economies look to bring the best out of them. This has thereby led towards strengthening of the overall trade relations and has developed a process which is aimed at improving the quality of life (Yang and Gupta, 2005). The result due to the stance is that it has helped to develop overall business and trade among the developing and developed countries along with the member countries providing an opportunity where economies based on their strengths can look towards garnering better results so that the different resources which they have are used wisely. The creation of union has also increased certain difficulties which need to be addressed properly so that proper measures which will help to control them can be developed. The creation of blocs has resulted in difference in culture between countries to become a hindrance in the manner work is carried out. The process has led towards integration of culture but has also led towards cultural clashes where one culture tries to dominate the other (Low, 2004). This has thereby impacted the gains which were achieved due to the creation of blocs and has impacted the manner in which different economies worked so that better effectiveness and growth of the economy becomes possible. Despite the different issues which blocs have faced it is true that it has helped in the growth and development of the region. Consider the case of European Union who has its own external policies making it compulsory for the member countries to follow it. Even when the member countries look into an international agreement with other economies who are not part of the Union then a proper analysis has to be done and the policies which have been developed by the European Union has to be followed. Individual countries cannot develop their own external policies and are bounded to follow the policies as provided by the European Union (Mathis, 2002). The policies which is developed by the European Union is properly integrated and ensures that decisions of individual countries doesn’t have an impact on the performance of other economies. This has thereby created a common market where trading of goods can take place easily. This has been further strengthened by the fact that it prevents its member countries in importing products at low price and then exporting the same to the member countries at a higher price. This would lead towards exploitation of the free trade agreement which exist between the members. The European Union has ensured that such actions are largely limited and the different economies look to carry out the transactions within their own limits (Ben-David, 2003). The development of trading blocs and unions is not only limited to the trading of capital goods but includes trade in services, the defense of intellectual property rights, and foreign direct investment which has helped to multiply the rate and pace at which different level of investment takes place within the economy (Nesadurai, 2003). The process has thereby shaped the manner in which different economic decisions are taken and have created an environment where economies have reduced tariffs and developed custom tariffs, export policies and trade protection so that the overall prospect is aimed towards improving the quality of trade which is taking place (Lingga, 2006). The overall phenomenon has transformed the manner in which different business decisions are taken and has helped to maximize the overall prospect through which better use of resources and business activities have taken place. The blocs have also provided an opportunity where better negotiations take place. Having different countries part of the trading bloc like European Union has strengthened their overall phenomenon to develop business. This has helped to ensure better bargaining power and come to proper negotiations which are directed towards achieving better coordination and ensuring that the different resources provides better advantage. Despite the different areas which have helped to develop the economies and business European Union is also viewed by many as a process where the economies have looked towards a strategy of protectionism so that the domestic industry can be protected (Fernandez and Jonathan, 2008). This doubt has arisen due to the fact that different economies when find certain objectionable matter which will have an impact on their domestic industry tend to take decisions which will protect their trading bloc and not look towards growth of business is a clear sign that protectionism to a certain degree is still prevalent even after the creation of trading blocs. In addition to it the blocs also creates situation where the smaller and underdeveloped economies feel dominated as the developed economies look towards posting their views and opinions on others and want economies to perform as they say (Tumbarello, 2006). Developed economies part of the union look to dominate other economies and due to their influential power and sound economic growth they are able to bring a change in the behavior of other economies creating an attitude of dominance (Bagwell and Staiger, 2008). The process thereby undermines the different advantage which the union or the trading bloc could have provided and makes economies have a doubt and suspicion even while entering into different business dealings. Despite the different areas of concerns and risk associated with the blocs it is on a continuous rise. Considering the European Union it can be seen that the creation of the trading bloc have provided an opportunity where different economies who are part of the union had no business relations before can enter into business relations. It has created an opportunity for the future and provided an opportunity where both the economies can look at gaining from the scenario (Krueger, 2007). The bloc has helped in developing a competitive bloc through the increase in bargaining power and providing an opportunity where economies can become influential and ensure that the different business decisions which are taken are taken for their own good. The process has helped to bring about a complete change in the outlook of economies and has relieve economies from different quotas and regimes thereby providing an opportunity to develop their business and ensuring better trade relations (Zakir, 2004). Thus, the creation of trading blocs like the European Union has strengthened the manner in which business is carried out and has helped to bring about a change in the manner transactions takes place among different economies. The creation of trading blocs has helped to remove the intra-bloc trade of goods and also helps to ensure non-tariff barriers between the different member countries through which liberalization and development of different policies have taken place. This has thereby helped to increase the volume of trade which takes place and has provided an opportunity to deal with competition in a better way. It is true that the creation of trading blocs have some negative effect also but the positives which the economies are witnessing due to the creation and development of trading blocs outweighs the negatives associated with it. This has thereby helped and ensured more and more trading blocs are created and are further bound to increase in the future. References Bagwell, K. and Staiger, R. (2008). Will Preferential Agreements Undermine the Multilateral Trading System? Economic Journal 108, 1162–1182 Baldwin, E., Forslid, R. and Haaland, J. (2006). Investment Creation and Investment Diversion: A Simulation Study of the EU’s Single Market Programme. World Economy 19 (6), 635– 659 Ben-David, D. (2003). Equalizing Exchange: Trade Liberalization and Income Convergence. Quarterly Journal of Economics 108 (3), 653–679 Bilal, S. (2008). Why Regionalism May Increase the Demand for Trade Protection. Journal of Economic Integration 13(1), 30–61 Fernandez, R. and Jonathan, P. (2008). 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