4.1.5a Trading blocs and the WTO

Question 1

bilateral

Answer 1

an agreement between two parties

Question 2

multi-lateral

Answer 2

an agreement between three or more countries

Question 3

static benefits

Answer 3

net welfare gain > net welfare losses

Question 4

dynamic benefits

Answer 4

gains from increased competition and efficiency

Question 5

a PTA is

Answer 5

a preferential trading area where tariffs and trade barriers are reduced on some but not all goods traded between member countries, e.g. India-Chile PTA

Question 6

a FTA is

Answer 6

a free trade area where countries within the FTA remove restrictions between each other but free to impose trade restrictions on non-members, e.g. NAFTA: US-Mexico-Canada

Question 7

a customs union is

Answer 7

when members of a customs union not only remove trade restrictions between each other but also agree to impose same import restrictions on non-member countries, e.g. EU-Turkey Customs Union

Question 8

a Commons Market is

Answer 8

when there are no import restrictions between member countries and no common external tariff but also permit free movement of labour and capital between its members, e.g. 27 EU Members

Question 9

an Economic Union

Answer 9

introduces a single currency (monetary union), market labour policies and tax harmonisation (fiscal union) e.g. 20/27 EU countries who adapted use of Euro

Question 10

a regional trading bloc is

Answer 10

a group of countries within a region that protect themselves from imports from non-members; form of integration