SENAXA TRADING BLOCS Flashcards
Regional Trade Blocs
Regional trade blocs are intergovernmental groups that reduce the barriers to trade in their region.
EU
The European Union is a trade bloc made up of 28 European nations (as of 2018).
The European Union is the most tightly integrated trade bloc, because it combines common external tariffs, with the free movement of labour and for many nations, a common currency in the Euro.
NAFTA
The North American Free Trade Agreement (NAFTA) is a trade bloc made up of the USA, Canada, and Mexico. In 2018, its name was changed to the USMCA.
NAFTA supports free trade between its three members. Removing internal quotas and tariffs is the aim of the organisation.
NAFTA does not have common external tariffs on nations outside the ‘customs union’ or ‘trade bloc’.
COMESA
COMESA is a grouping of 19 countries in east and southern Africa.
Its members include Kenya, Libya, Egypt, Madagascar, Mauritius and Zambia.
Mercosur
Mercosur is an economic grouping of Argentina, Brazil, Paraguay and Uruguay.
It was established by the Treaty of Asuncion in 1991.
Mercosur does have an external tariff on goods from outside the trade bloc.
ASEAN
The Association of Southeast Asian Nations is a trade bloc of 10 Asian countries, including Indonesia, Malaysia, Singapore, the Philippines, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.
Customs Union
A customs union is a group of countries who agree to remove barriers to trade between the union and enforce common trade barriers to those outside of the union.
Custom unions Regulations
Quality regulations are usually standardised within a customs union and people outside the union have to meet these regulations.
Custom unions tariffs
There are usually no tariffs or quotas between members of a custom union.
There is usually a common tariff on goods coming from countries outside of the customs union.
European Union customs union
The European Union is the most famous example of a modern customs union. But there are others including the Southern African Customs Union (which includes Namibia, Botswana and South Africa).
Custom unions Different to a free trade area
A customs union is a step up on a free trade area, the key difference being that in a free trade area there are no common external tariffs.
World Trade Organisation
The World Trade Organisation (WTO) is where countries meet to try and negotiate a reduction in trade barriers. Lower trade barriers can help to encourage specialisation and increase global output.
GATT of 1947
Many countries came together to form the General Agreement on Tariffs and Trade (GATT) in 1947.
The WTO now
The role of the WTO is still to encourage free trade, to provide a forum to resolve trade disputes, to lower tariff barriers.
The Most Favoured Nation Principle (MFN) says that any tariff reduction offered to one country must be offered to all (against trade discrimination).
The WTO Began with 23 members, and now has 163 members.
But the WTO is under threat from, in particular, the US’ more protectionist stance.
The European Single Market
The European Single Market is a customs union where all internal borders and between country restrictions have been removed.
Features of the European Single Market
The European Single Market has all the features of a customs union in addition to a number of other features:
Free movement in goods and services. In almost every case, goods sold in one country are available to all other countries.
Free movement of people. People are able to live and work in different countries in the single market.
Features of the European Single Market (cont.)
Free movement of money between member countries.
Agreed standards and regulations for all goods and services produced in the single market.
Members agree not to set rules or make laws that favour their own domestic firms, products or workers over other countries in the market.
Consequences of EU membership
European Union membership implies membership of the European Single Market and so all the features the market entails. In particular the freedom of movement of goods, services, people and money.
Members also agree to the rules of the customs union including the common external tariffs.
Members must accept laws and rulings from EU institutions including the European Court and Parliament.
Brexit
There were two key battlegrounds in the lead up to the Brexit vote.
Firstly, the free movement of people – which many believed had led to increased immigration into the UK, higher unemployment and higher costs for the government in supporting immigrants through benefits and government run services including schools.
Secondly, autonomy over laws – a number of Brits argued in favour of Brexit as it would mean that the UK would no longer have to accept the laws and rulings of the EU parliament and court.
Brexit cont
But lots of NHS workers come from the EU and lots of the goods (like BMW cars) that we purchase are bought tariff-free from EU countries.
