IntroductionThere has been a massive growth of trade and trade compositions over the past four decades. This is due to the emergence of regional, bilateral, and multilateral trade agreements. The effect of these agreements has been an improvement of the standards of living through increased productivity and commerce. It is been noted that these trade agreements have brought forth a new way of trading. Throughout the years, there has been growth of these agreements and they have had an impact on national and international trade (Salvatore, 1992). The history, implementation, and examples would draw a clearer picture. History of Composite Trading ActivitiesThe post World War II economic conditions especially among European countries led to a series of thoughts and ideas that was to put in place to improve the economies.
The Breton Woods Conference came up with an idea to improve international trade (lynch, 2010). This consisted of trade subsidies, reducing trade barriers and imposing quantitative restrictions. With such a proposal, the focus was on not only local or national trade but also trade within a certain region. It was a proposal that by opening the borders of a country would have certain benefits (Canto, 1985).
These include increased competition, as each member country would want to display and come up with a product of superior quality. Second, there would be an expansion of the markets for the members. This would imply that each nation had an opportunity to increase its production capacity. Third, advantages of economic of scale were to be experienced as the factors of production were to be mobile and pooled. Fourth, through this system, movement of goods and money was to be enhanced.
Fifth, there would also be employment creation due to increase of trade, and last, the industries within the blocs would also benefit, as they would be protected from imports outside the group members that are cheaper. However, critics of these free trade agreements such as Jacob Viner had some areas of concern (Bourdet, Gullstrand & Olofsdotter, 2007). These included free movements of people between borders could lead to illegal immigrants moving from one country to another. Second, the bloc members could end up focusing on trade amongst themselves and ignoring other non-member but essential countries.
Third, non-members of the blocs could feel left out because they were not to benefit from these agreements. Last, protection of local industries would also mean that some inferior firms would have protection at the expense of better firms producing quality goods outside the bloc. Despite the view from the critics, the process of economic and trade integration started to take effect. The process that took place can be broken into two separate stages. The first stage that took place between the early 1950s to the mid 1960s had concerns that include smooth flow of trade, increased consumption and how custom unions would affect the production process.
The second phase is what took place and is currently felt from the mid 1960s to date. It involves changes, implementations and the increase of these blocs that have led to economic integration.