Edexcel-Trading blocs 4.1 Flashcards
Trading bloc
A group of countries that form an agreement to reduce or eliminate protectionist measures between each other.
What do trading bloc’s increase?
Trade liberalisation
Trade creation
Trade creation
Businesses are able to enter new markets.
What does trade creation lead to?
Increase in sales volume and sales revenue
Trading blocs examples
EU
ASEAN
USMCA
NAFTA
When was the European Union formed?
1993
How does a country join the EU?
A country in Europe can apply.
How many countries are there in the EU?
28
What does being a member of the EU include?
Free movement of goods and services
Countries within the trade union have no restrictions between them.
Countries within union have external barriers to countries outside.
What percentage of GDP does the EU account for?
30%
Total population of EU
506M
When was ASEAN formed?
1967
How many countries are in the ASEAN?
10
What does ASEAN not allow for?
Free movement of people between countries.
What does a free trade aim to do?
Achieve free flow of goods in regions
Free trade lowers business costs
Increase Market share
When was NAFTA created?
1994
When was USMCA created?
2018
What does USMCA aim to do?
Free trade between countries
Where did USA businesses relocate?
Mexico
Why did USA businesses locate to Mexico?
More cost effective as lower wages paid to Mexican workers.
How did Mexican and American trade help America?
Import back to USA without tariff’s
How did Mexican and American trade help Mexico?
Create industries and jobs.
Disadvantages for businesses outside trading bloc
Higher costs for protectionist measures
Less competitive
Decrease sales volume
Benefits for businesses inside trading blocs
Wider markets
External tariff wall
Better field of workers to source from
External wall tariff
Applied to imported goods by a group of countries that have formed a trade agreement.
Drawbacks for businesses inside the bloc
Increased competition
New rules and regulations increases costs
Retaliation from other countries.
