International trade and access to markets

Question 1

What is a trade agreement ?

Answer 1

Formal agreement between two or more countries that removes trade barriers between those in agreement. A number of regional trading blocs have been formed around the world as a result of countries signing agreement to stimulate trade.

Question 2

Examples of trading blocs ?

Answer 2

EU

ASEAN - South East Asia companies

CARICOM - 20 Caribbean countries

Question 3

Example of a non-regional trading bloc ?

Answer 3

Organisation of Petroleum Exporting Countries (OPEC) - made up of members middle east, South America, Africa to focus on trade of oil globally which is the most important trade commodity.

Question 4

Adv and Dis of trade agreements

Answer 4

Elimination of tariffs, Mass production for a larger market reduces average cost of production, Attracts local and FDI because larger sized market.

Tariffs placed on external groups, Increases interdependence can mean some members can become overly dependant on other, Freedom of movement of labour increase competition for work and may cause unemployment.

Question 5

What are the barriers to trade and protectionism ?

Answer 5

Tariffs, Subsidies - grants provided to domestic producers to reduce their costs and make them more competitive against imported goods, Embargoes - partial or complete prohibition of commerce and trade with a particular country.

Question 6

What are some factors driving change in current patterns of global trade ?

Answer 6

Proximity, Agglomeration - some industries tend to cluster together, Exporters are drawn towards larger markets, Geopolitcal relationships.

Question 7

Summary of main patterns in global trade ?

Answer 7

Inter-regional trade particularly strong within Europe and Asia-Pacific, Latin America and Sub-Saharan Africa less regional trade, Inter-regional trade increasing between Asia-Pacific and Latin America (NEEs).