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World Trading System

& Regional Trade Agreements

Headings We need to Cover are :

1. Tariff and non-tariff trade barriers
2. International financial system
3. Exchange Rate
4. Exchange control
5. Trends of exchange rate systems
6. Role of international financial institutions
7. World Bank ,IMF and ADB
8. Evolution of GATT and WTO
9. Regional Groupings : EU,NAFTA,ASEAN and SAARC

World Trading System


The first world war (1914-1919) had been

overshadowed with the great deflation of 1930s.
During the end of second world war (1939-1945)
emerging nations been gathered at New Hampshire of USA to discuss post
war condition.
Their main concern then were establishing durable peace ,reconstructing of
the areas devastated by the world war 2nd and reviving the war-torn
That gathering later named Bretton Woods conference. That conference
established milestones in world economy and peace. As a result to bring
United Nations Organization been established. To bring prosperity and
uniformity in economy sector Concept of World bank,IMF and WTO been felt
and later materialized.
Todays Trading system is not country basis, somewhere there is string and
threads tied with each nations. IMF confirms exchange rate and helps
countries in BOP whereas WTO restricts barriers and promotes borderless
economy and World Bank sanctions loan to needy country and carries
projects that aims to
make human life easier.

Tariff and Non Tariff Trade Barriers

Trade Barriers
What are trade barriers?
Why country seek to practice trade barriers?
World has never been practicing free trading system. Many countries still
believe free trade hinders them. Russia had hold its membership from WTO
till 2011, but eventually it took membership and been a 156 th member in
2012. Trade barriers are embargos and restrictions for business.
Country seeks to practice trade barriers for the following reasons :
-To ensure national security and supply
-To correct a balance of payments deficit
-To protect Domestic industries against competition of foreign goods
-To generate government revenue from tariffs on imports.
-To protect national heritage and culture.

Types of Trade Barriers


Price effect
Ad Valerom duty,Specific Tariff,
Compound tariff, Countervailing Duty,Anti
Dumping duty

Trade policy instruments

QTY effect

Subsidies,aids and loans, Customs

Quotes, Border Regulations and
standards, Buy local legislation, Specific
Permission requirements,administrative
requirements,restriction on services

Tariff Barriers
As so far as we come to know Tariff barriers are imposed on the name of
protection of domestic business and to raise government revenues.
In other words tariffs are imposed on receiving goods of the countries so
that these goods would be expensive and domestic products could battle
Various types of Tariff Barriers have been discussed below :

1) Import duties
When government charges certain money on receiving goods or say
importing goods it is known as import duties.
Various types of Import duties are as follows :

1) Ad Valorem Duty : Here Valorem means on the basis of Value.

Certain percentage is charged on the amount of invoice of goods that
country has imported. Usually such duties of percentage is fixed.
2) Specific Duty : This is another form of import duties also known as
quantitative duty, in which tariffs are imposed depending upon
certain piece, weight and unit.
eg: fixed sum charged on per gallon, per ton, per piece
3) Compound Duty : Compound duty is equal to the sum of ad valorem
specific duty. This is combined form. Custom authority calculate
to be charged on both method and chose whichever amount is high.
4) Countervailing Duty : It is another interesting form of import tariffs
which is levied upon those importing goods which already been
subsidized by exporting countries.
Once a home country has subsidized upon certain goods if these
goods have come to host country and if it charged here too considering
subsidized again. It is known as countervailing Duty.

5) Anti-dumping duty : In developed countries there may various

industrial products which been declared dumped. When these goods
come to poor nations, host country imposes certain imports duties upon
Such duties are known as anti-dumping duty.
These goods often meant to sink in to sea or burnt down. However some
usable and good conditioned goods are exported to third world, the
prices of such goods are very minimal even below than costs. Host
countries have to save their indigenous industries from them so they
impose such duties.

Non Tariff Barriers

With wider influence of WTO and GATT policies, countries gradually
started to wave off tariff barriers and begin to search new means of
controlling imports. The importance of Non tariff barriers slightly realized.
Non tariff barriers are all means of favourism to the imported goods other
than the import duties.
On the basis of nature, these are of two types :
1) NTBs that affect Price (Subsidies, aids and loans, customs valuation)
2) NTBs that affect quantity-(Import quotas, buy local legislation, border
regulations and standards, specific permission requirements and
exchange controls, administration delays, Reciprocal requirements,
restrictions on services)

a. Subsidies : Subsidies can be defined as governments monetary or non

monetary assistance to home industries to cope over losses or make
them more competitive in overseas markets.

Monetary forms of subsidies are given as cash assistance where as nonmonetary forms of subsidies are counselling services,coaching,informing
about developments,sponsoring trade exhibitions abroad, and establishing
foreign contacts,assisting in signing MOU between foreign partners and so

In Nepal, TEPC (trade and export promotion

center) provides non monetary subsidies
to aspiring business houses.

b. Aids and Loans : Governments of developed countries also make

arrangements to create environment for their business interests. They
give aids and loans to poor nations, as to win several bigger contracts
such as in mining,roads,dams,bridges etc.
c. Customs valuation : This is the act of saving home industries from
manipulation in invoice. Under this custom officials doesnt recognize
invoice value of goods, rather they use other methods of calculation. They
often declare price on their self knowledge, this act favors home

4) Import Quotas : This is another form NTBs which affects quantity .

This form of NTBs is most notorious and merciless. Here country can
stop flow of goods to be imported allowing only certain number.
By this card , countries can pamper their small and big industries
however this reduces competition and increase in price is potential.
5) Buy local Legislation : This is popular form of NTB, earlier time many
countries have adopted this strategy. Under this a bill is passed to make
law that restricts use of foreign goods. This saves local industries as
their sale of product is at least secured by governments.
6) Border Regulations and standards : It includes various issues. The
importing nations practices several rules on border to create NTB.
Various quarantine check posts are in action in border to see over
animals imports, they seek various eco related certificates for sensitive
goods, they may also ban products that they confirm been produced
using child labor. They do same on the ground of Human rights. These
procedures are mostly in practice.

7)Specific Permission Requirements and exchange controls :

After import business houses obtain license to conduct importing business
their next requirement usually is exchange control.
Here governments designs specific policies to control over importing
Government may discourage importing business house by allowing certain
amount of Foreign reserves.
By this means of plot governments delays imports and discourages trends.
This is how domestic industries are saved.
8) Administration Delays : These are government pretends. Knowingly
unknowingly they delay in paper work or else for imported goods.
Government might not develop infrastrure, they may increase carrying
costs of imported goods and many other maneuvers.
9) Restriction on service : Countries can earn well handsome money if they
sell services to importing goods such as transportation, consulting and
banking but government usually doesnt carry out these businesses to
prosper its own service sectors. Government do mainly this to save jobs.
Govt usually differs its accounting procedures so that outsourcing would be

International Financial System

nternational Financial System

For businessman and his transactions it is easy to do
business in the country. There is a system and he has to
deal with only one currency. Once his business goes to
abroad, he may have problems dealing with two or more
He has to put consistent eyes on exchange rates of the currencies he is
doing businesses.
MNCs and their IB manager need to understand the dynamics of foreign
exchange, if they are meant to survive. Importing exporting managers
even need this knowledge. The exchange rate of currencies get change on
eye blink.
Companies operating in host countries need to know the financial system to
finance their operations and maintenance of their inventories. The whole
around of financial system that includes cross country exchange system
and rates,exchange control and its subsystem, central and commercial
banking subsystem is intl financial system.

Foreign Exchange : Foreign exchange is a payment Mechanism for

international transactions. When transactions are affected between two
countries having different currency systems payments are made through
an agreed foreign currency.
Payments for foreign transactions involve foreign exchange because :
1) There is no common money acceptable to all countries
2) Almost all countries depend on foreign transactions as none of them
are self sufficient
3) Globalizations has enlarged social, economic and political
relationships between nations.

Foreign exchange Rate : Foreign exchange rate is the nominal

price of one nations money in terms of another or it is the price to be
paid in local currency for a unit of foreign currency. For example ,it is
the number of Nepalese rupees we pay to buy each US dollar or say we
pay RS 88 to buy one $.The Nepal Rastra Banks Exchange rate
Notice appears in the governments official
Broadsheet national dailies and other media.

Exchange Control : Exchange controls

are various forms of

controls imposed by a government on the purchase/sale of foreign
currencies by residents or on the purchase/sale of local currency by
Common foreign exchange controls include:
Banning the use of foreign currency within the country
Banning locals from possessing foreign currency
Restricting currency exchange to government-approved exchangers
Fixed exchange rates
Restrictions on the amount of currency that may be imported or exported
Objectives of Exchange control

improve BOP
control on unessential Imports
import essential Products
control the capital outflow
maintain exchange rate

Trends of Exchange Rate System

Briton had adopted policy of currency control on the
basis of gold standards which lasted till 1970s
but later it realized failed. Then, Floating foreign
exchange rate system been introduced and many
countries have adopted.
However some of country are practicing their way of exchange rate
In summary the trend of exchange rate system has suffered from very
centralized system to being liberalized floating and controlled floating
system. These have been discussed briefly.
1) Centralized and controlled Exchange rate system
Under this government plays major role in foreign exchange. Exchange
rate is not fixed by the means of demand and supply of currency.
2) Fixed Exchange rate system
This is another form of exchange rate system in which government fix the
forex rate by the means of participating in the market. The aim of this
forex rate is to save economy and support the countries development
Eg: NRB has fixed the indian currencys value as 1=1.6.

3) Pegged forex rate system

When countrys currency exchange rate tied up to another foreign
currencies value because of their weaker money value,
this is known as pegged forex rate system.
E.g. : Nepal and Bhutan have been pegged to Indian
rupees. So that change in $ doesnt impact direct to
Nepalese currency.
Such as most of the countries have been pegged to
US $.
4) Floating Exchange rate system
When there is free market economy, exchange rate been
determined by market forces demand and supply where
government intervention is none.
This forex system is known as Floating exchange rate system.
If there is government intervention then it becomes dirty Floating forex
system or Managed Floating system.

The Internation
Monetary Fund
The international
Monetary fund had been
conceived During Bretton
woods Conference in
1944 and it had started
its operations from 1947.
IMF,has headquarters in Washington D.C. and till date it has 184
members country. Currently IMF has been running by lady Chritine
Lagarde from France after Dominique Staruss Kahn has resigned amidst
through scandals.
IMF had been created not to repeat Depression that of like 1930s. The
29 member countries of UN, signed Articles of Agreement in 1945 and it
became specialised body.
IMF has seen European Managing director since its inception .It is the
central Institution of the International monetary system .The IMF helps
promote the world economic growth and raising the standard of living.

What IMF does for its Members

Advices on
Policies and


in Hard

ening IM

IMF organizations

Board of Governors

Executive Board

Monetary and
Committee(BOG +

director is the
chairman of 24

(BOG + WB)

Objectives of IMF
-Promotes cooperation and Global Business
-Creates stability in exchange and discourages Competitive exchange
-Helps to build multilateral system of payments, avoids restrictions,
demolishes unparalleled system
-Fosters International trade and creates Employment opportunity
-Grants temporary financial assistance to member countries to maintain
-Maintains orderly exchange rate system
The IMFs five largest shareholders the United
States,Japan,German,France, and the U.K along
with China,Russia, and Saudi Arabia.

IMF Quota
At the time of country receives membership from IMF, It has to deposit
some wealth , on behalf of what country receives loan facility.
This is called IMF quota, according to richness of country the wealth to
be deposited get vary.
This IMF quota also holds voting power and amount to be received , this
is called Special drawing rights(SDRs) .
Regarding the major countries Voting powers or holding in the total
quota,USA holds the highest of 17.08 %, Japan 6.13% and our country
has 0.04 %.

Role of IMF in Financial SyStem

The IMF aims to prevent crises in the system by encouraging
countries to adopt sound economic policies. It also assists in policy
preparation to its members by evoking them to adopt polices that
garners economic credibility and strength. It reduces their
uncertainity to economic and financial crises. Whenever country
faces balance of payments problems, IMF quota would be great in

Role of IMF in Nepal

IMF has been assisting Nepal in reforms programme, Enhanced Structural
Adjustment Facility.
Nepal has 71300 thousand quota among which 91.9% been used.
Nepal has taken several monetary assistance from IMF since it took
membership in september 6, 1961.
Nepal still holding talks with IMF to get Extended Credit Facility (ECF)
Nepal already has received Rapid Credit Facilty of SDR 28.52 million as a
Remember 1SDR= $1.45186 as of JULY 31, 2005

President: Robert Zoellick Current Jim Yong Kim


The World Bank System is Composed of five organizations

1)IBRD( International Bank for Reconstruction and Development

2)IFC(International Finance Corporation

3)IDA(International Development Association

4)MIGA (Multilateral Investment Guarantee Agency

5)ICSID (International Centre for settlement of investment disputes

Nepal became a world bank member on September 6, 1961 the same
date when it took membership from IMF as well. Its relationships with the
world Bank is limited those with IDA and IFC.
TheWorld Bankis aninternational financial institutionthat
providesloans todeveloping countriesforcapital programs.
The World Bank's official goal is thereduction of poverty. According to the
World Bank's Articles of Agreement , all of its decisions must be guided by
a commitment to promoteforeign investment,international trade, and
The World Bank differs from theWorld Bank Group, in that the World Bank
comprises only two institutions: theInternational Bank for Reconstruction
and Development(IBRD) and theInternational Development
whereas the latter incorporates these two in addition to three
more:International Finance Corporation(IFC),Multilateral Investment
Guarantee Agency(MIGA), andInternational Centre for Settlement of
Investment Disputes(ICSID).

TheInternational Finance Corporation(IFC) is aninternational

financial institutionwhich offersinvestment, advisory, andasset
management services to encourageprivate sector
developmentindeveloping countries.
The IFC is a member of theWorld Bank Groupand is headquartered in
Washington, D.C.,United States. It was established in 1956 as the
private sector arm of the World Bank Group to advanceeconomic
developmentby investing in strictly for-profit and commercial projects
whichreduce povertyand promote development.The IFC's stated aim is
to create opportunities for people to escape poverty and achieve better
living standards by mobilizing financial resources for private enterprise,
promoting accessible and competitive markets, supporting businesses
and other private sector entities, and creating jobs and delivering
necessary services to those who are poverty-stricken or otherwise
The IFC is owned and governed by its member countries, but has its own
executive leadership and staff which conduct its normal business
operations. It is acorporationwhoseshareholdersare member
governments which providepaid-in capitaland which have the right to
vote on its matters

IFCs Investment in Nepal

- Joined Date Jan 7th 1974/75
- Nepal been provided loan assistence of $3.1 million For Hotel Soaltee
And Rs 10 million for Nepal oriend Magnesites ltd.
-Nepals Bhote Koshi Power co. PVT LTD been granted $3 million loan and
syndication $24 million.
-In 1998, IFC has approved $4 million for Jomsom Mountain Resort PVT.
- Rural Microfinance Development Centre got NRS 58 million loan facility .

International Development Association IDA

TheInternational Development Association
(IDA) is aninternational financial institution
which offers concessionalloansandgrantsto
the world's poorestdeveloping countries.
(country which has PCI below than $600)
The IDA is a member of theWorld Bank Groupand
is headquartered inWashington, D.C.,United States. It was established in 1960 to
complement the existingInternational Bank for Reconstruction and Developmentby
lending to developing countries which suffer from the lowestgross national income,
from troubledcreditworthiness, or from the lowestper capita income. Together, the
International Development Association and International Bank for Reconstruction and
Development are collectively known as theWorld Bank, as they follow the same
executive leadership and operate with the same staff
The IDA has issued a total $238 billion USD in loans and grants since its launch in

IDAs Investment/Role in Nepal

-Date of Joined March 3rd, 1968
-Nepal received US $ 1.70 million loan in 1970 for telecom projects.
-Nepal has been utilizing investments in
transporattion,transit,irrigation,drinking water and
sewerage,electricity,rural and forest development,tourism,cottage
-IDA has provided a soft loan of US $ 23.5 million to Nepal for the
construction of dry ports(Biratnagar).
-IDA has so far provided finance for more than 70 projects in Nepal,
mostly in agriculture/irrigation(42%),forestry education and health(16%)
and transport(13%).
IDA has concentrated its major attention on
Poverty alleviation Programme in Nepal.

3. International Bank for Reconstruction and Development

IBRD is one of the very first WB group, which too was conceived during
Britton woods conference.
The idea was clear, IBRD been thought to work as a bank who would
facilitate soft loans to war torn countries for their reconstruction and
development activities. IBRD aims to reach to those devastated
countries which been largely affected due to either heavily involved
into war or say been crippled into war.
Nepal is not a true member of IBRD or say Nepal seek soft loans which
easily available from IDA while IBRD gives hard loans with high
interest and rigid payment system. IBRD deals with economically
sound countries only.

4. Multilateral Investment Guarantee Agency (MIGA)

This is one of the major World bank group which helps to foster foreign
direct investment in countries.
There always a risk for companies to put money into business. In the
case of international business many MNCs are so careful while investing
in cross border nations. Here in this case MIGS helps these companies to
invest in new countries. MIGA enables and assures companies for their
guarantee in prosperity. MIGA works directly with the government and
presses them to issue business friendly laws and acts which garners FDI.
MIGA also provides technical assistance and advisory services to help
countries strengthen the capacity of investment promotion
intermediaries and distribute information on investment and capital
related opportunities.

International Centre for settlement of investment disputes (ICSID)

This supreme body is accountable for settlement of investment disputes.
Investors of whole over world felt the need of one body which will look
after investment disputes or say business related any
misunderstandings. Thats why this ICSID came into existence.
ICSID assists to foster FDI by granting international amenities for
conciliation and arbitration of investment disputes, thereby making an
environment where both home country investors and host country
investors would be benefited.


ADB is a regional development bank established on 22 August 1966 to
facilitate economic development of countries in Asia. The bank admits the
members of the United Nations Economic and Social Commission for Asia
and the Pacific.
From 31 members at its establishment, ADB now has 67 members - of
which 48 are from within Asia and the Pacific and 19 outside. ADB was
modeled closely on the World Bank, and has a similar weighted voting
system where votes are distributed in proportion with member's capital
At present, both the United States and Japan hold 552,210 shares, the
largest proportion of shares at 12.756% each. China holds 228,000 shares
(6.429%), India holds 224,010 shares (6.317%), the 2nd and 3rd largest
proportion of shares respectively
Nepal holds 5202 shares, i.e.,0.15% of the total. The ADB lending to Nepal
started from the year 1969. Nepal is the 27th largest shareholder among
regional members and the 35th largest among the overall members.

Objectives of ADB
-Eradicating Poverty
-Encouraging Economic
-Assisting in HR
-Empowering Women
-Promoting stable Natural
sector and developing
agriculture arena.
ADBs Role in Nepal
-Nepal has received total cumulative lending of $2.63 billion
-ADBs nine focus areas are Agriculture,Education,Water
supply,transport,information and communication,finance,energy,public
private sector mgmt,climate change, Social protection
ADB looks after governments various projects and scrutinizes and
invests in suitable projects and aware government of poverty level and
presses government to work in favor of them and works in specialized

General Agreements on tariff and Trade

During Bretton Woods conference, countries made agreement to

establish an supreme body which will overlook global trade. They
decided to establish ITO(International trade organization). But this
organization never came into existence and countries signed GATT
general agreements on Tariff and trade on behalf of ITO.
Later GATT been heavily criticized and it is touted as Rich mens club.
Countries felt need to introduce another supreme body and talks had
been held in 1994 in Marrakesh of Morocco that decided to establish
WTO as an organization to systematise the global trade through
promotion of rule based Multilateral trading system.

This way the conceived idea of ITO been changed into GATT agreements
and later it emerged as WTO (world trade organization.

Difference Between GATT and WTO

-GATT was an agreement signed between countries whereas WTO is an
organization which has permanent status.
-GATTs scope bounded within trade in goods only whereas WTO deals
with all type of goods.
-Because GATT was an agreement members are only contracting parties
but WTO has full fledged members.
-GATT was implemented on the basis of commitment hence ad hoc but
WTO is complete body which has legal basis.
-Under GATT disputes handling procedures were rigid and lengthy but
WTO has faster,automatic,rule based, very effective.

All Green coloured countries are
WTO members

WTO members
EU and WTO members

January 1, 1995


Centre William Rappard, Geneva,



157 member states


English, French, Spanish


Pascal Lamy


196 million Swiss francs (approx.

209 million USD) in 2011.




The World Trade Organization (WTO) is an organization that intends to
supervise and liberalize international trade. The organization officially
commenced on January 1, 1995 under the Marrakech Agreement,
replacing the General Agreement on Tariffs and Trade(GATT), which
commenced in 1948. The organization deals with regulation of trade
between participating countries; it provides a framework for negotiating
and formalizing trade agreements, and a dispute resolution process
aimed at enforcing participants' adherence to WTO agreements which are
signed by representatives of member governments and ratified by their
parliaments. Most of the issues that the WTO focuses on derive from
previous trade negotiations, especially from the Uruguay Round (1986
Nepal is the 147th member , and Cambodia the 148th. Nepal has the
Privilege of being the first LDC to have entered WTO through the
Accession Process under Article 12.

Regional Groupings :

What is Regional Groupings?

Are regional groupings and Economic regional groupings same?
Regional Groupings implies the association and belongingness of two or
more than two countries to seek common goal in business prospective.
Regional groupings generally covers more than economic sectors where
as economic regional groupings focuses on Economic activities between

Important Regional Groupings in the World

1. EU = European Union(27 countries)
2. EFTA=European Free Trade
3. NAFTA=North American Free Trade Association(USA,Canada,Mexico)
4. ANCOM=Andean Common Market(Bolivia,Colombia,Equador,peru,Venezuela)
5. CACM=Central American Common Market(CostaRica,El
6. BA=Bankok Agreement(Bangladesh,India,Laos,S.korea,Sri Lanka
7. GCC=Gulf Cooperation Council=Baharain,Kuwait,Oman,Qatar,Saudi,UAE
8. ACM=Arab Common Market(Egypt,Iraq,Jordan,Lebanon,Libya,Mauritania,Syria)
9. ASEAN=Association of South east asian Nations
10.SAARC=South Asian Association of Regional Cooperation
11.BIMSTEC=(Bay of Bengal initiative for multi sectoral Technical and Economic
Cooperation) BD,India,Mynmar,Sri Lanka,Thailand,Nepal,Bhutan,
12.APEC=Asia Pacific Economic Cooperation
(21 countries lying on the rim

of pacific ocean touching















Per capita


GDP (nominal)




Per capita







Euro () (EUR)
Used in the 17
countries of the
eurozone and by
the EU's
institutions. The
other member
states and
territories use other

Time zone

(UTC+0 to +2)

Internet TLD


(UTC+1 to +3)

The European Union (EU) is an economic and
union of 27 member states which are located primarily
Europe. The EU traces its origins from the European Coal and
Steel Community(ECSC) and the European Economic
Community (EEC), formed by six countriesin 1951 and 1958
respectively. The Maastricht Treaty established the European Union
under its current name in 1993.The latest amendment to the constitutional basis
of the EU, the Treaty of Lisbon, came into force in 2009.
Important institutions of the EU include the European Commission, the Council of
the European Union, the European Council, the Court of Justice of the European
Union, and the European Central Bank. The European Parliament is elected every
five years by EU citizens.
The EU has developed a single market through a standardized system of laws
which apply in all member states. Within the Schengen Area(which includes 22 EU
and 4 non-EU states) passport controls have been abolished. EU policies aim to
ensure the free movement of people, goods, services, and capital, enact
legislation in justice and home affairs, and maintain common policies on trade,
agriculture, fisheries and regional development. A monetary union, the eurozone,
was established in 1999 and The EU is represented at the United Nations, the
WTO, the G8 and the G-20.
With a combined population of over 500million inhabitants,[or 7.3% of the world
population,the EU, in 2011, generated a nominal gross domestic product(GDP) of
17.6 trillion US dollars.

North Atlantic Free Trade Area

The North American Free Trade

Agreement (NAFTA) is an agreement
signed by the governments of Canada,
Mexico, and the United States, creating a
trilateral trade blocin North America. The
agreement came into force on January 1,
1994. It superseded the Canada United
States Free Trade Agreement between the
U.S. and Canada. In terms of combined GDP
of its members, as of 2010 the trade bloc is
the largest in the world.
NAFTA has two supplements: the North
American Agreement on Environmental
Cooperation(NAAEC) and the North
American Agreement on Labor Cooperation


Mexico City,
Ottawa, and
Washington, D.C.


United States


December 22,















Per capita


GDP (nominal)



Per capita




SAARC(south asian association
for regional cooperation)
Comprises eight countries of south asia
Bangladesh,Bhutan,India,Maldives,Nepal,Pakistan and
Sri Lanka. It was established on 8 December,1985.
Afghanistan joined SAARC in April 2007.
Saarc Provides a platform for the people of south asia to work together in a
Spirit of friendship,trust and understanding. It aims to promote their welfare
And to improve their quality of life.

Objectives of SAARC
-Promote Welfare and improve quality of life of people of this region
-Accelerate economic growth,social,progress and cultural development in the
-Promote and strengthen collective self reliance
-Contribute to mutual trust,understanding
-Promote active collaboration and mutual assistance in the economic,social,
cultural,technical and scientific fields.

SAARC in Brief
Sri Lanka

Official languages

Kathmandu, Nepal
South Asian
8 Members[show][show]
Sri Lanka
9 Observers[show][show]
European Union





Secretary General







Time zone

Per capita

Mohammed Waheed
Hassan Manik
Ahmed Saleem
December 8, 1985
US$ 4,382,700
US$ 2,779
See footnote 2
(UTC+4 to +6)

If considered as a single entity.


Of South
East Asian

Association of south east asian nations was formed in 1967. It has ten members as
follows: Brunei,Cambodia,Indonesia,Laos,Malaysia,Myanmar,
Objectives of Asean
-To expand econommic,social,cultural administrative and technical cooperation.
-To accelerate economic progress and stability of the region
-To strengthen regional peace and security
Asean has a preferntial trading arrangement system. But the system covers only
about 5% of ASEAN trade. In 1992 ASEAN free trade area (AFTA) was
established. A common effective preferential tariff has come in force. Intra- ASEAN
trade and investment has increased.
ASEAN covers a land area of 4.46million km, which is 3% of the total land area of
Earth, and has a population of approximately 600 million people, which is 8.8% of
the world's population. The sea area of ASEAN is about three times larger than its
land counterpart. In 2010, its combined nominal GDP had grown to US$1.8trillion.
If ASEAN were a single entity, it would rank as the ninth largest economy in the
world, behind the United States, China, Japan, Germany, France, Brazil, the United
Kingdom, and Italy.



Surin Pitsuwan

ASEAN Summit


Bangkok Declaration

8 August 1967


16 December




601 million








US$ 3.084trillion

Per capita

US$ 5,131

GDP (nominal)



US$ 1.800trillion

Per capita

US$ 2,995