Trading Blocs And WTO Flashcards

MAXIMISE YOUR BRAIN POWER

1
Q

List the type of trade blocs

A
  1. Free trade area
  2. Custom Union
  3. Common market
  4. Monetary Union
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define free trade area

A

Members remove all trade barriers with each other.

but able to set trade barriers against non-members

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define customs Union

A

Removes all trade barriers between members and a common external tariff on non-member countries.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Define common market

A

Removes all trade barriers between member countries, a common external tariff, and free movement of factors of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Define monetary Union

A

Countries who share a common currency, monetary and fiscal policy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Define trade creation

A

switch from buying products from a high cost producers to a low cost producer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Define trade diversion

A

When country switches from buying products from a

low cost producer to a high cost producer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What might trade creation depend on

A
  1. Time and Size of removal of trade barriers
  2. Non price factors (loyalty, quality)
  3. Other factors - Exchange rate/State of the economy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Benefits of trading blocs and evaluate

A
  1. economic growth (exports more price competitive -> improvement in (X-M) -> AD rises -> Real GDP rises)
  2. Employment rises due to rise in export demand

EV
1. trade diversion may occur due to efficient producer outside of bloc

  1. brain drain may occur for poorer countries
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Conditions for successful monetary Union

A
  1. Same economic cycle
  2. Automatic fiscal transfers when countries perform poorly
  3. Free movement of labour
  4. Free financial and price flow
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Possible conflicts between RTA and WTO

A
  1. RTA rules contradict WTO principles
    - trade discrimination/ tariff on non members
    - leads to trade diversion

eg . Protectionism policy against non-members, causing trade diversion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what are the main roles of WTO

A
  1. Negotiate/implement trade agreements
  2. Platform for trade negotiations
  3. Monitor trade policies on country
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Difference between regional trade agreements and bilateral trade agreements

A

Regional is a trade agreement with members within a region

Bilaterial: agreement between 2 countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly