Social and economic groupings of nations

Question 1

What are the different types of trade alliance? 4

Answer 1

Free trade areas.
Customs unions.
Common markets.
Economic unions.

Question 2

What are free trade areas?

Answer 2

Countries agree to ban tariffs/quotas on trade between themselves, but maintain restrictions on outside goods.
E.g. NAFTA.

Question 3

What are customs unions?

Answer 3

Operate a tariff on imports outside the group.

E.g. Mercosur.

Question 4

What are common markets?

Answer 4

Like custom unions, but allow free movement of labour and capital.
E.g. old EU.

Question 5

What are economic unions?

Answer 5

Members are acquired to do all of the above.
Adopt common policies in areas e.g. agriculture, transport etc.
E.g. present day EU.

Question 6

What are some of the major trade blocs in the world?

Answer 6

1. European Union - EU.
2. North American Free Trade Agreement (NAFTA).
3. European Free Trade Association (EFTA).
4. Mercusor - Argentina, Brazil etc.
5. Caribbean Community (CARICOM).

Question 7

What are the advantages of international groupings? 8

Answer 7

1. Peace with international understanding.
2. Barriers removed - increased trade - high living standards.
3. Overall greater democratic function.
4. Particular sectors can be supported e.g. agricultural sector within the EU.
5. Remote regions can receive support from larger organisations.
6. Possibility of developing a common currency.
7. Easier migration movement.
8. Smaller nations - more representation in world affairs.

Question 8

What are the disadvantages of international groupings? 7

Answer 8

1. Loss of sovereignty.
2. Some loss of financial controls to a central authority e.g. European Central Bank.
3. Pressure to adopt central legislation.
4. Certain economic sectors damaged by sharing resources e.g. UK fishing sector with France.
5. Elites can hold disproportionate power through voting systems.
6. Federal drive is opposed by some.
7. Smaller regions in large countries demand a greater voice - separatism.