4.1.5

Question 1

What is a trading bloc?

Answer 1

Group of countries who comes together to remove barriers of trade.

Question 2

What is Free Trade Areas?

Answer 2

Remove trade barriers on members of group, however are free to set any barriers on non member countries. (USMCA)

Question 3

What is Custom Unions?

Answer 3

Remove trade barriers on members of group, however must have the same tariffs on non-member countries. (EU)

Question 4

What is the Common Market?

Answer 4

Remove trade barriers on members of group. however must have same tariffs on non-member countries, also have free movement of labour.

Question 5

What is monetary Unions?

Answer 5

Remove trade barriers on members of group. however must have same tariffs on non-member countries, also have the same currency.

Question 6

Role of WTO?

Answer 6

The make judgment during trade disputes and encourage elimination of trade barriers.

Question 7

Effects of trading blocs on trade?

Answer 7

Trade creation - Improves efficiency and generates higher incomes

Trade diversion - Countries change trading partners to suit trade agreements, possibly taking less efficient country (less comparative advantage)