THE GATT VOTE: IMPACT ON BUSINESS : World Trade Blocs

The new World Trade Organization is the international governing authority for the myriad trade rules negotiated by more than 100 nations in Geneva last year. As envisioned by the treaty, global tariffs would be slashed an average of 40%, government subsidies would be reduced and many trade barriers affecting food and other products would vanish. Yet there will remain an alphabet soup of regional trade alliances. Export mania is spreading, and many nations have lost enthusiasm for old-fashioned trade restrictions. Part of the significance of the global trade deal is that many tariffs paid by non-members of regional pacts will be lower than before. In addition, the World Trade Organization plans to negotiate further tariff reductions in the future, aiding trade partners who are not members of the same regional alliance. The membership of trade alliances is changing fast, though, and old boundaries are blurring. Here is a glance at some of the agreements and alliances, large and small:

1. Asia Pacific Economic Cooperation (APEC): APEC was established 1989 to promote trade and investment in the Pacific Basin, in response to a more exclusive East Asian zone advocated by Malaysia. APEC’s 16 members, who represent 40% of global trade, include Japan, China, South Korea, Hong Kong, the United States and Canada. APEC members set free trade by 2020 as a goal.

2. European Union (EU): This expanding market is the offspring of the European Economic Community, launched in 1957 as Western Europe struggled to recover from World War II. Despite Norway’s recent vote not to join, the EU is a highly effective example of regional economic cooperation, and its influence is expanding. Longtime members include Germany, France and Italy, and the addition of Austria, Finland and Sweden next year will bring the EU roster to 15.

3. North American Free Trade Agreement (NAFTA): The 1993 deal has bound Mexico, the United States and Canada in an increasingly “North American” market, in which trade barriers and tariffs are gradually vanishing. NAFTA, not quite 1-year old, has received generally positive reviews as trade has expanded solidly among the three neighbors. Fears that it would prompt an exodus of U.S. jobs into the cheaper labor market of Mexico have proven unfounded.

Several smaller alliances include:

4. Andean Group: Launched in 1969 to increase economic ties within South America. Its success has been limited by members’ reluctance to abandon individual trade policies in favor of collective agreements. Members are Bolivia, Colombia, Peru, Ecuador and Venezuela.

5. Assn. of Southeast Asian Nations (ASEAN): Fromed in 1967 to promote economic and cultural cooperation in Southeast Asia. Members, which grant each other preferential duties on many products, are Indonesia, Malaysia, the Philippines, Thailand, Singapore and Brunei.

6. Australia-New Zealand Closer Economic Relations pact (CER): The 1983 deal aimed for a manufactured-goods free-trade zone encompassing the two nations. Subsequent agreements covered most services, along with efforts to harmonize product standards, customs procedures and business laws. 7. Caribbean Community and Common Market (CARICOM): Established in 1973 to promote economic integration among less-developed nations in the region. Members include Antigua, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts-Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago.

8. Central American Common Market: Under this 1960 pact, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua are working toward a common market. But progress has been hindered by protectionism and ideological differences among the countries.

9. Southern African Development Community (SADC): This 10-nation pact emerged from a 1979 organization dedicated to cooperating on regional development plans and to reducing the nations’ economic dependence on South Africa. But progress has been hindered by the members’ weak economies. In August, South Africa joined the group, which is widely considered the key economic and political alliance in the region. Other members are Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, Tanzania, Zambia and Zimbabwe.

10. Southern Common Market (Mercosur): Established in 1991 to create a common market among Argentina, Brazil, Paraguay and Uruguay, Mercosur is off to a strong start. Tariff reductions are stimulating business, and trade among members has more than doubled since 1990. 11. RUSSIA: Economic relations between Russia and other nations of the former Soviet Union have been chaotic after the unraveling of Comecon, their former economic alliance. But the western world beckons: Earlier this year, Russia signed an agreement with the European Union lifting most barriers to Russian exports. Russia and Western Europe also agreed to start official talks in 1998 to establish a Europe-Russia free trade zone.

1. APEC

2. EU

3. NAFTA

4. Andean Group

5. ASEAN

6. CER

7. Caricom

8. Central American Common Market

9. SADC

10. Mercosur

11. Russia

Researched by JANET LUNDBLAD / Los Angeles Times