Trading Blocs

Question 1

What is a trading bloc?

Answer 1

A group of countries that have signed an agreement to reduce or eliminate tariffs, quotas, and other protectionist barriers between themselves.

Question 2

What are the 5 main types of trading bloc?

Answer 2

• Preferential trading bloc
• Free trade areas
• Customs unions
• Common markets
• Economic unions

Question 3

What are preferential trading areas?

Answer 3

Where tariff and other trade barriers are reduced on some but not all goods

Question 4

What are free trade areas?

Answer 4

When all tariffs and quotas are removed on trade in goods between member countries

Question 5

What are customs unions?

Answer 5

Where there is free trade within the trading bloc and a common external tariff on goods coming from outside the bloc.

Question 6

What are common markets?

Answer 6

Are customs unions where both labour and capital have freedom of movement within the area.
And where product standards and laws concerning free movement of goods and services are common between countries.

Question 7

What are economic unions?

Answer 7

Implies that there is some degree of fiscal union with a central body having some powers over taxation and spending, and monetary union, where all member countries share a common currency.

Question 8

What are most regional trade agreements?

Answer 8

Bilateral agreements

Question 9

What are some examples of trading blocs?

Answer 9

• NAFTA
• ASEAN
• EU
• UNASUR