4.4 - trade policies + negotiations Flashcards
Protectionism
Aims to restrict imports from other countries
Tariff
Tax imposed on products imported from abroad
Quota
Limit on number / value of imports allowed into the country
Voluntary export restraint
Agreement between trading nations to limit no. of exports to one another
Red tape regulations
Increase costs of trading - admins + inspection fees
Embargo
Complete ban on trading with another nation
Strengths of protectionism
- Can raise money for govs (tariffs)
- Protects infant industries
- Increased demand for domestic firms - increase output / producer surplus
Weaknesses of protectionism
Higher prices for consumers for imports
Nations could retaliate
Free trade area
Multiple countries agree to eliminate trade barriers amongst themselves
North American Free Trade Agreement (NAFTA)
Customs unions
Agree not to impose tariffs on each other’s goods + agree to place a common tariff on goods outside this agreement
Benelux - Belgium, Netherlands, Luxembourg
Single Market
Trade bloc where trade restrictions are removed
Caribbean community (CARICOM)
Monetary Union
Agreement to create a single currency area
Eurozone
Economic union
Agreement to allow G+S + workers to move freely between areas
Eurasian economic union
Strengths of economic integration
Increased comp -R+D + innovation
Increase in AD - increase Xrev
- Larger market - internal economies of scale
Weaknesses of economic integration
Continent monopolies could occur
- Developing nations could suffer
- Concentration of industries = unemployment
