TEHRAN(Bazaar): Geoffrey Carliner Professor at Boston University believes that removing trade barriers and significantly increasing trade requires strong political support in countries that join regional trade areas.
Bazaar: What is the importance of regional trade blocs for the economic and trade growth of member countries?
Carliner: Joining regional trade blocs has increased growth in several countries. The Mexican economy grew faster after Mexico joined NAFTA (North American Free Trade Area) with the US and Canada. Spain and Portugal also had faster economic growth after joining the European Union, as did Poland, Hungary, and other eastern European countries when they joined the EU. Brazil, Argentina, and Uruguay also benefitted from forming Mercosur, which considerably increased their trade in manufactured goods and other products.
Other regional organizations have stated their intention to negotiate free trade areas with no trade barriers among member countries but have not done much to eliminate these barriers. These organizations include ASEAN, the South Asian Free Trade Area, and the ECO, among many others. It is often easier to state an intent to reduce trade barriers than actually to do it.
Bazaar: The ECO comprises a population of half a billion, owns one-third of the world's energy resources, has a unique connection between Europe and China, and Russia, the Persian Gulf and the Indian Ocean, and a young and powerful workforce. What is the reason for the ineffectiveness of this organization despite such potential?
Carliner: Iran, Pakistan, and Turkey all have large populations and large economies. There is significant potential for expanded trade among them. The potential for increased trade with the central Asian countries is much less. They are generally very small, have tiny economies, or export oil and gas, which Iran does not need to import.
Bazaar: The 15th Economic Cooperation Organization (ECO) Summit was hosted by Ashgabat, Turkmenistan. Considering Iran's membership in the Shanghai Organization and Iran's important position in connecting China to Europe; Russia and Central Asia to the Persian Gulf Will we see a change in the ECO?
Carliner: Removing trade barriers and significantly increasing trade requires strong political support in countries that join regional trade areas. This seems to be lacking in the ECO, as well as in many other regional trade blocs that exist on paper but where trade among member countries is small. This will probably continue to be true for the ECO. Strengthening economic ties with China is probably more important for Iran than strengthening ties with neighboring Pakistan and Turkey. Likewise for Pakistan and Turkey, strengthening ties with China, the EU, and the US is probably more important for them than strengthening economic ties with Iran.
Bazaar: Despite high trade potentials, trade within eco-zones is still less than 10%. How can this amount be increased? Do the countries of this organization basically have the potential to increase intra-regional trade?
Carliner: Significant increases in trade among ECO countries is possible but seems unlikely.
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