Trade Agreements Flashcards
Define Trade Agreements
When countries mutually agree to form trade blocs that benefit each other (e.g: free-trade areas)
Define free trade areas
Mutual agreement no tariffs on traded goods - within a trade bloc
Define a customs union
EU - countries join and agree to same tariffs outside the union
Define a common market
Countries impose few or no duties on trade with each other but a common tariff on outsiders
Outline the anagram of OPEC
Organisation of Petroleum Exporting Countries
When and why was OPEC founded?
1960’s founded - group that aimed to take back control of profits of exported petrol from TNCs
What countries are members of OPEC?
Countries from the Middle East, South Africa and Africa - eg Iraq, Angola, Libya
What did OPEC do to the oil exporting market in 1973?
Gained full control of market - cartel - gained 1/2 of supply market
What happened to the oil market in 1986?
Price crash - countries going to green energy/finding new oil
What control do OPEC currently have over the oil market?
30%
What are 3 global pros to nations growing as trading entities?
- Improve global peace
- Improve global trade
- Countries develop own economies
What are 3 regional pros to nations growing as trading entities?
- Bigger representation in global affairs
- Freedom of movement of trade
- Compete on a global level
Outline the anagram for CAP
Common Agricultural Policy
What is the CAP?
System of subsidies & support programs for agriculture
How does CAP achieve it’s aims?
Combines direct payments to farmers + price/market supports
When and why was the CAP founded?
1957 - Treaty of Rome
Reduce food shortages, increase farming efficiency, waste quotas, fair prices
What are the aims of the CAP today?
Ensure ethical & sustainable farming
Be competitive in world markets
What are 3 cons of trade agreements?
- Loss of democracy - decisions are central
- Loss of financial controls to a central authority (e.g: banks)
- Damage to economic sectors by sharing resources
Outline the anagram of NAFTA
North American Free Trade Agreement
What is the NAFTA and when was it founded?
Trade bloc for USA, Canada and Mexico - 1994
What are the 4 main aims of NAFTA?
- Gradual Elimination of all trade barriers
- Promote economic competition of members
- Increase investment opportunities
- Improve member co-operation
What are 3 positive impacts the NAFTA has had?
1.Trade between countries X3 1993-2007
2. USA manufacturing + employment increased
3. Mexican workers increased wages
What are 3 negative impacts the NAFTA has had?
- Canadian companies closed - competition from lower cost USA firms
- USA firms -> Mexico = jobs lost
- USA + Canada food surplus dump in Mexico = reduce food prices
How do shoes highlight the job loss in the USA due to NAFTA?
Before NAFTA: Mexico shoes had tax + cheap labour
After NAFTA: no tax - job loss in USA + increased jobs in Mexico = de-multiplier effect
