The EU and Trade creation & Trade diversion Flashcards
What does the EU mean for agricultural products?
Established many free trade agreements that have increased the trade of agricultural products such as pork, beef and dairy.
What is an example of the agricultural influence of the EU?
The EU-South Korea FTA on many agricultural products, which has benefitted EU exporters of beef and pork. This has created a trade diversion effect on non-EU countries, such as China, now facing higher tariffs and increased competition from EU producers
What does the EU mean for textiles?
Established many FTAs that have affected trade of textiles.
What is an example of the textile influence of the EU?
The EU-Vietnam FTA eliminated tariffs on textiles, which has benefited EU textile exporters. This created a trade diversion effect on non-EU countries, such as China, who used to be a major exporter of textiles to Vietnam, but now face higher tariffs and increased competition from EU products
What is an example of the automobile influence of the EU?
EU-Japan FTA eliminated tariffs on automobiles. Created a trade diversion on non EU countries such as the US, who used to be major exporters to Japan.
How can trading blocs increase trade and economic growth?
They create a larger market with reduced trade barriers, which can lead to increased trade and economic growth
Trading blocs can lead to trade diversion effects, is this a good thing?
This is a good thing for smaller countries within the bloc, but less so for non-members
How do trading blocs make trade across borders easier?
They can improve access to goods and services.
How can trading blocs lead to an unequal distribution of benefits?
Some countries and industries benefit more than others
What do trading blocs do to prices?
Lower prices and increased competition as producers compete for larger markets
How do Foreign Direct Investments view trading blocs?
Increased FDIs as companies seek to take advantage of the larger market and reduced trade barriers
How can trading blocs create vulnerabilities in the event of political or economic crises?
Can lead to a greater dependence on other member countries for trade and economic growth
