4.1.5 Trading blocs

Question 1

What is a Trading Bloc

Answer 1

A trading bloc is a group of countries that sign a trade agreement
EG: Reduce trade barriers

Question 2

Name 3 Trading Blocs

Answer 2

1. ASEAN
2. NAFTA
3. EU

Question 3

What are the advantages of becoming a member of a trading bloc?

Answer 3

1. No trade barriers

2. Access to more international markets

Question 4

Disadvantages of being a member of a trading bloc

Answer 4

1.Have to pay a yearly fee to use the trading bloc

Question 5

How is NAFTA different from the EU?

Answer 5

1.NAFTA is a trading bloc whereas the EU is a union that has free trade agreements.

Question 6

What types of trading blocs is there?

Answer 6

1. Common Market
2. Customs Union
3. Economic and monetary union
4. Free Trade Area
5. Single Market
6. Trading Bloc

Question 7

What is a Common Market?

Answer 7

• An area where goods, capital and labour are free to move without restriction
• Tariff free trade

Question 8

What is a Custom Union?

Answer 8

Is where all barriers are removed and members adopt a set of protectionist barriers against non-member states

Question 9

What is a Economic and monetary union?

Answer 9

Where the countries have a single market and currency

Question 10

What is a Free Trade Area?

Answer 10

Where there is complete free trade, but they have different trade barriers against non-members

Question 11

What is a Single Market?

Answer 11

A market where all barriers have been removed and have common laws governing trade.

Question 12

What is a Trading Bloc?

Answer 12

A group of countries that have signed a regional trade deal to reduce or eliminate tariffs, quotas and protectionists measures.

Question 13

Advantages to a business of being within trading bloc

Answer 13

1. Tariff free → reducing costs, allowing a business to be more competitive
2. Larger market access
3. Cheaper to import stock or raw materials
4. One product stand → allows a business to reap economies of scale

Question 14

Disadvantages to a business of being within a trading bloc

Answer 14

1. Greater competition
2. It may be difficult for small domestic firms to compete with larger overseas competition
3. Some countries may allow businesses to produce with lower ethical or environmental standards

Question 15

What is the Free Trade Agreement?

Answer 15

• Goods and services can be sold tariff free and the product meets the EU product standards
• Although trade is free, there is no longer a free border.This means that all UK exports to the EU and imports from the EU to the UK have to have full documentation proving product standards and the country of origin of all materials.
• This gives UK firms access to the single european market → 27 countries, 450 million consumers, GDP $16 trillion, GDP per capita $39000
• More competition in the UK domestic market from EU businesses, but it may also make it harder for some small EU business to export to the UK
• The UK is now free to sign free trade agreements.It has signed one so far with australia but this will have very little impact on UK businesses or the economy
• Some large businesses threatened to move out of the UK if the UK left the single market such as Toyota and Nissan as they were concerned about tariffs on their exports to the EU and the bureaucracy and potential import tariffs preventing JIT from working, but no major firms have relocated to the EU.