4.4 trade policies and negotiations Flashcards
What is protectionism ?
Measures taken by a country to restrict international trade
What is a trading bloc
Where a group of countries in a region agree to cooperate in international trade through some sort of free trad area or other form of association
What is a tariff
A tax imposed on imported goods
What is a quota ?
An agreement by a country to limit its exports to another country to an agreed quantity
Draw a tariff diagram and explain effects of tariffs
Import image
Draw a quota diagram and explains its effects
Import image
What is economic integration
The process of becoming a member of a trading bloc
What is a free trade area
Occurs when countries agree to remove import tariffs and other barriers to promote trade in goods and services
What are the stages of economic integration
- Free trade area
- Customs union
- Single market
- Monetary union
- Economic union
What is a customs union
Agreement between member countries to abolish tariffs and quotas and adopt a common external tariff for non-member countries
What is monetary union
Occurs when two or more countries share a common interest rate set by a common central bank
What is the economic union
Occurs when two or more countries share a common monetary and fiscal policy
What are the four freedoms at the heart of the concept of a single market ?
- Free trade in goods: businesses can sell their products anywhere in the EU’s member states and consumers can but where they want with no penalty
- Mobility of labour: citizens of EU member states can live and work in any other country
- Free movement of capital: currencies and capital can flow freely between member states and EU citizens can use financial services in any member state
- Free trade in services: professional services such as pensions,architecture, telecommunications, and advertising can be offered in any member state.
What is trade creation
Occurs where economic integration results in high cost domestic production being replaced by imports from a more efficient source within the economically integrated area
Draw and explain the diagram for trade creation
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What is trade diversion
Occurs when economic integration results in trade switching from a low cost supplier outside the economically integrated area to a less efficient source within the area
Draw and explain a trade diversion diagram
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Draw a graph to explain trade creation and trade diversion combined
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What are the advantages of protectionism ?
What are the disadvantages of protectionism ?
what is the Worlds Trade Organisation
An international organisation that seeks to promote free trade
What is the role of the WTO?
they oversee trade between member states, provides a forum for trade negotiations, settles disputes and works to build agreements between member states while supporting the needs of developing countries
what are the benefits of joining the WTO
what are the risks of joining the WTO
