4.1.5 Trading Blocs

Question 1

Trade Blocs

Answer 1

Groups of countries in specific regions that manage and promote trade activities.

Question 2

Types of trade blocs

Answer 2

1) Free trade areas
2) Customs Unions
3) Single market

Question 3

Free trade areas

Answer 3

Removal of all trade barriers between countries.

ASEAN
NAFTA

Question 4

Customs unions

Answer 4

Agreed set of tariffs against non-members but free trade between members.

EU

Question 5

Single markets

Answer 5

Free trade and common standards.

EU

Question 6

Examples of Trade Blocs

Answer 6

1. EU
2. NAFTA - Canada, Mexico and the United States.
3. ASEAN

Question 7

EU

Answer 7

• Free trade.
• No trade barriers (quotas, tariffs or subsidies).
• Four freedoms (goods, services, capital, people)
• Common standards (standardisation and harmonisation)

Question 8

Advantages of trade blocs

Answer 8

+ Access to new markets.
+ Easier to source labour.
+ Less competition from outside trading bloc.

Question 9

Disadvantages of trade blocs

Answer 9

• Increase competition within trading bloc.
• Common rules and regulations.
• Retaliation from countries outside bloc.
• Less competition from outside bloc, reduces incentive for business to be more efficient.