Free Trade Agreement Flashcards
Define Free Trade Agreement (FTA)
an agreement between 2 or more countries to remove or reduce trade barriers between them and often results in freer trade
What is the difference between a bilateral and multilateral free trade agreement?
bilateral is between 2 countries and multilateral is between more than 2 countries
Give 2 examples of multilateral FTAs that Australia is involved in
AANZFTA - ASEAN, Australia, NZ (12 countries)
CPTPP - Australia, Brunei, Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam ( 12 countries)
Give 2 examples of bilateral FTAs that Australia is involved in
CERTA - Australia and New Zealand
SAFTA - Australia and Singapore
Define the term ‘trading bloc’ and give an example
trading bloc occurs when a number of countries join together in a preferential trading arrangement to the exclusion of other countries
(e.g. the EU)
Define the term ‘monetary union’ and give an example
monetary union is when multiple countries share one currency (e.g the euro)
How many countries make up the EU?
28 countries (without UK)
Which countries form NAFTA? What is its new name?
USA, Mexico, Canada - USMCA
What is APEC? Why is it not an FTA?
Asia-Pacific Economic Cooperation - 21 countries
the forum never delivered on its ambitious free trade goal and only played a modest role in advancing free trade thus not a trade agreement
What are the advantages of bilateral and multilateral FTAs? (2)
Acts as stepping stones to broader, global trade agreements
The WTO has been moving so slowly on generating new global free trade agreements, that it is necessary for countries to engage in their own agreements or miss out on waves of growth
What are the disadvantages of bilateral and multilateral FTAs? (3)
They add to the complexity of global trade
They can be costly and time-consuming to negotiate. However, it is quicker than the WTO
The benefits are overstated, redirecting trade (trade diversion) rather than growing it
