Trading Blocs And Trade Agreements Flashcards
What is a trading bloc
A trading bloc is a group of separate nations and countries which come to agreements between rules and regulations of trade between nations
Regional trade agreements
A trade agreement between a group of countries which are located closely
Bilateral trading agreements
A trading agreement between 2 nations
Free trade areas
Areas in a trade deal which allow the free movement of capital and goods in order to stimulate economic growth without any tariffs or quotas.
Pacific alliance
Customs unions
Trading agreement between nations which encourage the abolishment of tariffs and quotas in order to encourage the free movement of factors of production.
E.U
Common markets
Where countries adopt an external tariff which puts restrictions on trade with nations outside of the trading bloc/market
EU
Monetary unions
A group of nations using the same currency in order to uncomplicated the terms of trade
Example, Eurozone - Founded in 1999, notes came into circulation in 2002
Free trade
Trade free from artificial barriers such as quotas and tariffs
Costs of trade agreements
Cannot trade efficiently with nations outside the bloc
Inefficient producers within the bloc have no incentive to improve
Retaliation of non members, may form there own bloc
Benefits of trade agreements
Economies of scale
Encourages specialisation - Improves quality of goods if nation focus on a main export and trade with that for others from countries in the bloc
Trade protection from outside rivals e.g. China
World trade organisation
A global organisation which attempts to ensure that trade flows as smoothly and as freely as possible
Conflicts between Trading blocs and the WTO
WTO may enforce laws that certain blocs don’t want to follow
May force the inclusion of other nations to encourage “world trade” despite them being hinderances
