Trade agreements

Question 1

Free trade area

Answer 1

Members abolish tariffs and quotas to stimulate trade between themselves
E.g. NAFTA

Question 2

Customs Union

Answer 2

Free trade + external tariff from imports from non-members

E.g. MERCOSUR

Question 3

Common Market

Answer 3

Free trade+customs union + free movement of capital and labour

Question 4

Economic Union

Answer 4

A common market but requires all members to adopt the same policies as eachother
e.g. The EU

Question 5

OPEC

Answer 5

Organisation of Petroleum Exporting Countries

Question 6

Benefits of trade agreements

Answer 6

Peace
Allows free trade
Help develop stable QOL
Allows global competition
Common currency
Spread democracy

Question 7

Weaknesses of trade agreements

Answer 7

Pressure to adopt central legislation
Loss of financial control
Protectionism isn’t allowed
Loss of sovereignty

Question 8

Case study for trade agreements

Answer 8

NAFTA
North American Free Trade Agreement
USA, Canada and Mexico

Question 9

Benefits of NAFTA

Answer 9

Tripled trade since 1990’s
Manufacturing growth in US
Mexico received FDI