25 : Trade

Question 1

What are trade groupings

Answer 1

When countries come together to improve trade and economic activity
e.g. Reduce trade buriers

Examples of trade group :
- ASEAN
- USMCA
- EU

Question 2

What is customs unions and free trade

Answer 2

Free trade : when a group of countries agree to trade without briars between themselves but maintain their own barriers with countries outside the group/area e.g. USMCA

Customs unions : where a group of countries not only agent to grade without barriers but also to have a common tariff on the rest of the world

Question 3

What is trade diversion

Answer 3

When countries within a trade group import from other trade group partners rather than import from cheaper non member countries

Question 4

What is trade creation

Answer 4

When members of the trading group start to specialize in industries that they have A competitive advantage and benefit from economis marlenesies