4.1.5 Trading blocks the world trade organisation Flashcards
what are free trade areas?
no import tariffs or quotas on products from one country entering another
what are custom unions?
a group of countries that:
- abolish tariffs and quotas between them
- Adopt a common external tariff on imports from non-member countries.
what are common markets?
deeper integration between participating countries
- extend beyond free trade in goods
- free movement of labour across borders
- relaxation of capital controls.
what are monetary unions?
is a form of economic integration beyond participation in a single market
- involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency eg Euro
risks of joining monetary union?
- central bank loses the freedom to set monetary policy interest rates solely to meet macro
objectives - can’t devalue exchange rate to help improve trade
- some retailers will increase prices when the currency is switched
what are bi-lateral trade agreements?
two countries promoting trade,
- will reduce or eliminate import tariffs, import quotas, export restraints, and other non-tariff trade barriers to encourage trade and investment
what does the world trade organisation do?
permits trade blocs, provided that they result in lower import protection against outside countries than existed before the creation of the trade bloc
why are there conflicts between trade blocs and the WTO?
trade blocs engage in free trade with their members (which is in line with WTO aims) but often put up trade restrictions/barriers against non-members (which is against WTO aims)
what four roles does the world trade organisation have?
- conductor role, ensures rules they have created are followed
- tribunal role, settled disputes between members
- monitor role, reviews trade policies to make sure they’re applied fairly and consistently
- training, train govt officials (esp developing countries) to help them engage in trade
