4.1.5 - Trading Blocs

Question 1

What is a trading bloc?

Answer 1

• A trading bloc is a type of intergovernmental agreement to reduce regional trade barriers

• Depending on how closely the members wish to integrate their economies they may form different types of trading blocs such as free trade areas, customs unions, common markets and full economic & monetary union

• UK is part of the EU trading bloc

Question 2

EU Trading Bloc

Answer 2

EU trading block – brief details
• The EU is a single marketplace between the 28 member countries (with a notable exception of Switzerland which remains independent).
• There is free movement of; people, money, goods and services between all 28 countries
• 19 of these countries also opted to have the Euro as their currency (to stabilise their currency), this is the Eurozone

Question 3

Brexit – impact on UK

Answer 3

• Brexit means we leave the EU trading Bloc (maybe, it’s all a bit unsure)
• Without an agreement on trade, the UK would have to operate under World Trade Organisation (WTO) rules, which could mean customs checks and tariffs on goods as well as longer border check for travellers
• Brexit won’t even get underway until 2019 so it is very unlikely that you will be asked a question on it, but you should still know about it

Question 4

Brexit – impact on UK

Answer 4

• Brexit means we leave the EU trading Bloc (maybe, it’s all a bit unsure)
• Without an agreement on trade, the UK would have to operate under World Trade Organisation (WTO) rules, which could mean customs checks and tariffs on goods as well as longer border check for travellers
• Brexit won’t even get underway until 2019 so it is very unlikely that you will be asked a question on it, but you should still know about it

Question 5

Hard Brexit

Answer 5

• A hard Brexit would likely see the UK give up full access to the single market and full access of the customs union along with the EU
• The arrangement would prioritise giving Britain full control over its borders and making new trade deals
• A hard Brexit, however, could see British goods and services subject to tariffs, adding 10% to the cost of exported cars
• While sectors such as agriculture could lose protections against cheap imports from abroad

Question 6

Soft Brexit

Answer 6

• A soft Brexit would mean that the UK would have full access to the single market on a tariff free basis
• British firms could also do business in any part of the EU, and the goods from the UK would not be subject to border checks
• However this means the UK would have to make payments into the EU budget – which they don’t want to do and they have to accept the free movement of people which does not achieve the immigration targets of the government

Question 7

Association of Southeast Asian Nations (ASEAN)

Answer 7

ASEAN was started in 1967 to promote economic and social growth in the region
• Thailand
• Philippines
• Malaysia
• Vietnam
• Burma
• Laos
• Cambodia
• Brunei

Question 8

North American Free Trade Area (NAFTA)

Answer 8

• NAFTA was created in 1992 with the simple idea of giving the customers in the USA, Canada and Mexico cheaper goods.

Question 9

Trade bloc expansion defined

Answer 9

• Expansion of a trading bloc; the process of more countries joining an existing trading bloc, thereby making it expand