7.3.3 Flashcards
What are the benefits of trade blocs?
Trade blocs provide members with greater access to a larger market by reducing barriers to trade between member nations
What are the benefits of trade blocs for members?
Members of trade blocs can trade and develop more easily because they can sell larger volumes of goods without needing to pay tariffs to access the market
What are the disadvantages of trade blocs for non-members?
Trade blocs retain common barriers to trade (such as tariffs) for countries outside of the bloc, reducing their access to the market
What are the aims of WTO? (2)
Increase the volume of international trade by promoting free trade
Help to resolve trade disputes between member nations
How many countries are members of WTO?
It has over 160 member nations and accounts for 98% of global trade
What initiative did WTO put in place to help LDE countries gain access to markets in HDE>
The WTO creates Special and Differential Treatment (SDT) agreements these:
Help LDE countries achieve economic growth by giving them greater market access
An example of an SDT is the EU’s Everything But Arms (EBA) initiative which allows least developed countries to export all products (except weapons) to the EU without any tariffs or quotas
What have STDs been criticized for?
SDTs have been criticised for allowing cheap imports into HDE countries which could undermine local businesses
Outline history of EU as a trading bloc and number of members
The EU was set up in the 1950s to increase trade and economic growth in the 6 member nations
Creating greater interdependence
Reducing chances of conflict
It has expanded over time, reaching a peak of 28 members before the UK left the bloc in 2020 (Brexit)
How EU increases socio-economic and political integration? (3)
The Schengen area consists of 23 European countries that have removed border controls allowing people and goods to move freely between countries
Free movement of people has allowed more than 13 million people with citizenship from one EU country to live in another EU country
The Euro is the EU’s single currency which has been adopted by 20 member states making it easier and quicker to trade
What were the arguments for Brexit?
Control over trade agreements with other countries - the UK has signed a range of trade agreements including with New Zealand, Iceland, Norway and Japan
Greater control over immigration - free movement of EU nationals would stop
Freedom from EU policies and laws ‘regaining sovereignty’
What were the arguments against Brexit? (5)
The EU was the UK’s largest trading partner (over 40% of exports and over 50% of imports)
Free movement of citizens to other EU countries
Loss of subsidies for agriculture
Loss of workers has particularly impacted agriculture (seasonal workers pick fruit/vegetables) and the hospitality and care sectors
Loss of EU funding
What are the economic impacts of differential access to markets?
Limited access to markets reduces the ability of a country to achieve economic growth
Tariffs are often placed on secondary commodities rather than primary commodities so LDE countries are forced to sell lower-value primary commodities to avoid tariffs
Access to a trade bloc increases the potential for trade for example joining the EU in 2007 increased Bulgaria’s potential for trade with other member states
Leaving a trade bloc as the UK did in 2020 means that trade deals have to be negotiated with other countries individually this may lead to poorer trade deals
Recession in one country can impact the economy of other countries in the trade bloc
What are the social impacts of differential access to markets?
Limited access to markets results in lower incomes and poorer standards of living for citizens
Countries with limited access to markets have less money to invest in education and healthcare, which reduces future development
Membership of a trading bloc can increase the availability of jobs which improves income and standard of living
Deindustrialisation caused by cheaper goods being imported can lead to the decline of industrial areas
Explain how differential access to markets can impact the economic well-being (4 marks)
Being in a trading bloc increases the potential for trade (1), for example, USMCA / NAFTA means that trade is enabled between Mexico and the US (1d). This improves the economic well-being of Mexico where thousands of jobs are generated in the car industry (1).
However, being in a trading bloc can also have negative impacts such as a dependence on the economy of countries in the trading bloc (1). For example, Mexico suffered economically due to the recession in the US in 2008 (1) due to its reliance on exports to the US (1d).
Some countries do not have access to trading blocs which limits trade (1) For example, Ukraine does not have access to the single market of the EU and has to negotiate its own deal (1). This means Ukrainians are not free to move to the EU to earn higher wages reducing economic well-being (1d).
