4.1.5 - Trading Blocs

Question 1

Def trading bloc

Answer 1

Is a group of countries that sign up to free trade between them

Question 2

Def dumping

Answer 2

The practice of selling off excuses production in a foreign market at an exceptionally low price

Question 3

3 things trading blocs are working towards

Answer 3

• free trade
• harmonisation of laws
• free movement of labour

Question 4

What is meant by harmonisation of law

Answer 4

All members have the same legal standards governing business operations

Question 5

Attractions of trading blocs

Answer 5

• harmonisation of laws - same product meets all legal requirements - EOS
• means more power than individual nations no stand up to non member countries
• incentives boosting efficiency for firms

Question 6

5 main trade blocs

Answer 6

EU, ASEAN, NAFTA, MERCOSUR and EAC

Question 7

Description of EU and single market

Answer 7

• 27 members 445 mil consumers
• achieved introducing single currency
• very attractive for companies to access

Question 8

Description of ASEAN

Answer 8

10 members: Brunei, Cambodia, Burma, Laos, Malaysia, Thailand, Vietnam, Philippines, Indonesia and Singapore
- dominated by success of China, Japan and South Korea who ASEAN try to work with

Question 9

Description of NAFTA

Answer 9

• three members: Canada, Mexico and USA

- attractive by Mexico’s low manufacturing costs and USA being worlds largest domestic market

Question 10

4 advantages of trading blocs

Answer 10

• free movement of goods, potential to create a large single market
• external tariff insulate businesses from competition
• as trade grows, becomes economic for governments to provide infrastructure
• greater advantages when free movement of labour

Question 11

3 disadvantages of trading blocs

Answer 11

• competition increases due to free trade
• new rules and regulations must be agreed to create single market
• reduced ability to access neighbouring markets such as China