Discuss the implications of the European Union`s role as a major international trader

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Discuss the implications of the European Union 's role as a major international trader

Introduction

The world economy is undergoing a revolution . The most perceptible reflection of this revolution is the shift in the balance of power as international trade is boost after immense involvement of European Union . The purpose of this is to examine the impact of these European Union agreements on multilateral or international trading system . There have been a series of new initiatives to try and create multinational

trade areas in global markets . The issue is whether these initiatives herald the demise of an open world trading system and the transition to a more conflictual , tripolar system of trading blocs . The major of the implications of the European Union 's role is the emergence of several regional trading arrangements (RTAs ) and trading blocs in recent years poses major new challenges to the global trading arrangements

This will also examine the effect successful free trade agreements must rely upon a certain level of shared political cohesion in to smooth over the disputes that are bound to surface periodically as economic interpenetration accelerates . The prospect is to use them as investigational laboratories for co-operation on issues that have not yet been addressed multilaterally . The challenge is to manage them Multilateral control under WTO auspices will depend significantly on the willingness of affected WTO Members to summon compensation and dispute-settlement mechanisms , and on making certain that RTAs are open and transparent

Main Body

The theory of regional integration has established that there is nothing intrinsically harmful or damaging concerning free trade areas or customs union . So long as they effect in net trade creation , the effect on global economic welfare is affirmative . The provisions of Article XXIV go several ways in ensuring that this will be the case . Particularly while not precluding the prospect that a CU /FTA could result in net trade diversion , the obligation that the average level of outer tariffs after the formation of the CU /FTA must be no higher than the level before increases the possibility that net trade creation will be the outcome . FTAs may , however , still be harmful from a global perspective if they hinder further multilateral liberalization (Emanuel Ornelas 2005

Moreover , such evidence as is obtainable would suggest that , to date most regional trading blocs formed amongst developed countries have resulted in net trade creation . Early attempts at regional integration amongst developing countries were less successful and can have resulted in net trade diversion . Even then , though , the effect on global economic welfare was marginal (Andrew Mitchell , 2005

Impact Growth of the New Regionalism

In certain ways , regional trading blocs might actually speed up the process of global trade liberalization . Economists argue that an essential condition for preferential liberalization to be deemed multilaterally satisfactory is that the volume of imports by member countries from the rest of the world must not decline on a product-by-product basis after the implernefitation of the agreement (Kemp...