impact of trading blocs

Question 1

the advantages for businesses INSIDE a trading bloc

Answer 1

• no barriers to trade = easier to export to other countries
• wide market to sell to
• access to a large workforce particularly skills not available domestically = free movement of labour
• likely infrastructure will improve e.g. links. between cities/countries = eos
• external tarrif walls = protects businesses within the trading bloc from competition outside

Question 2

the disadvantages for business INSIDE a trading bloc

Answer 2

• Greater competition = small businesses cant compete with bigger ones
• May have to adhere to new rules/laws, e.g. Health & Safety, Labour laws
• Internal problems become magnified
• Increased costs of importing raw materials if coming from outside the trading bloc
• reatliation = find it difficult to trade with countries outside of trading bloc

Question 3

the problems for businesses OUTSIDE the trading bloc

Answer 3

• Prices are forced up due to tariffs – lack of competitiveness
• Increased costs to meet legal requirements / standards
• Preference of ‘local’ goods/services within the bloc
• Harder to access resources from inside the bloc