Trading Blocs

Question 1

What is a trading bloc?

Answer 1

An agreement between countries to have free tarde within an external tariff wall

Question 2

What are the attractions of trading blocs?

Answer 2

· A level of protection from a tough world
· The beneficial pressures of competition, companies in a trading bloc have to compete directly with companies based in other countries on the same bloc, this pressure forces them to be as efficient as possible

Question 3

What are the different trading blocs?

Answer 3

EU
ASEAN
NAFTA

Question 4

What is the single market?

Answer 4

A type of trade bloc (in the EU) in which most trade barriers have been removed

Question 5

What are the advantages to businesses of trading blocs?

Answer 5

· Free movement of goods between members gives the potential to create a large single market
· External tariff walls insulate the business from competition from another part of the world
· As trade grows between the neighbours, it becomes economic and necessary for governments to provide infrastructure support

Question 6

What are the disadvantages to businesses of trading blocs?

Answer 6

· Competition increases due to freer trade
· To create a single market, new rules and regulations may be agreed
· Within a geographically close bloc there mare be common factors that become common problems