Trading blocs Flashcards
What trading bloc is Nigeria part of?
AfCFTA -
African Continental Free Frade Agreement
When did Nigeria sign the AfCFTA agreement?
July 2019
How much of Africa’s exports are intracontinental?
Only 17%
How much of Asia’s exports are intracontinental?
59%
How much of Europe’s exports are intracontinental?
68%
How many people have become connected by the AfCFTA?
1.3 billion people across 55 different countries
What is liberalisation?
Fewer barriers to selling products globally
What was the trading relationship like between the US and China in 2018?
They were in a trade war
What happened during the trade war between the US and China in 2018?
US tariffs target China. 20% on washing machines & 30% solar panels.
US adds global tariffs on metals, which were later withdrawn.
China imposes tariffs on 128 american products.
More tariffs implemented between both the US and China.
The USA are in trade deficit to China, will tariffs on Chinese goods solve this?
Not necessarily. Might trigger a trade war (retaliation) which triggers a recession
How is China suffering from the trade standoff between them and the US?
The US is buying lots of imports, but is not selling lots to China with a different of around $150bn for exports and imports
What is a trading bloc?
A group of countries within a geographical region that protect themselves from imports from non-member countries. They’re a form of economic integration.
How many types of trading bloc are there?
4.
What are the types of trading bloc?
Preferential trade area.
Free trade area.
Customs union.
Common Market.
What is a preferential trade area bloc?
PTAs exist when countries within a geographical region agree to reduce or eliminate tariffs on selected goods imported from other members in the area
What is a free trade area bloc?
When two or more countries in a region agree to reduce or eliminate barriers to trade on all goods coming from other members
What is an example of a free trade area bloc?
NAFTA/UMCA
What is a customs union bloc?
Involves the removal of tariffs between members, plus acceptance of common external tariffs against non-members. Meaning members may negotiate as a single bloc with 3rd parties, such as other blocs or the WTO
What is a common market bloc?
Member countries trade freely in all economic resources. This means no barriers for goods, services, capital and labour.
Must be a significant level of harmonisation of micro-economic policies, and common rules for power and anti-competitive practices; e.g. Common Agricultural Policy, and European Single Market
What is trade creation?
Takes place when domestic consumers in countries import more goods and services as import prices fall due to a removal of import tariffs and quotas, production will shift to a lower cost producer
What is trade diversion?
Negative trade implications when country joins customs union or FTA
What is a subsidy?
When the government gives money for producing something (e.g. senegal peanuts)
How does subsiding make China more competitive?
The government gives money and therefore they sell steel for more money. This lowers the prices and means production is bought more
What is protectionism?
Helping domestic producers through subsidies or tariffs
