Unit 4: Chapter 2 - Growing Economic Integration Flashcards Preview

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What is the primary purpose of the WTO?

To open trade for the benefit of all


What does the WTO promote?

Trade liberalisation by encouraging countries to lower protectionist barriers and increase trade flows thus creating larger markets, greater access to raw materials, more competition, lower prices and greater choice, it wants to promote free trade


What is the WTO responsible for?

Ensuring that countries act in accordance to various trade agreements they have signed


What will the WTO help to resolve?

Complaints through negotiations between countries involved


What have the WTO organised?

A series of negotiations aimed at reducing tariffs and quotas


What type of groups have criticised the WTO?

Anti-globalisation, environmental and developmental lobbies


What is a criticism of the WTO in terms of small countries?

Small countries in the WTO wield little influence


What is a criticism of the WTO in terms of politics?

The politicians representing the most influential countries in the WTO focus on the commercial interests of profit-making companies rather than the interests of all despite the WTO claiming to help the developing countries


Why does the WTO argue that subsidies are not beneficial?

Things that we subsidise could be bought from poor countries


What are rich countries doing which allows them to block imports from developing countries?

They are able to maintain high import duties and quotas on certain products


What has there been an increase in (in terms of rich countries having more power in the WTO)?

Non-tariff barriers such as anti-dumping measures being allowed against developing countries


What is happening in the agriculture market that shows how rich countries have more say in the WTO?

The maintenance of high protection of agriculture in developed countries whilst developing ones are pressed to open their markets


Why do more developed countries have more power in the WTO?

Many developing countries do not have the capacity to follow the negotiations and participate actively


Why is the WTO still viewed to be good despite its criticisms?

Some of the negotiations they have arranged could generate gains in real income, the WTO does not have the power to destroy cultures and it my have a pro free trade bias but it cannot force poor countries to enter into internationally binding agreements


Why are more regional trade agreements predicted to be formed?

If trade talks continue to fail, many observers believe regional groupings will play an even bigger role


What do RTAs tend to form the basis of?

Trading blocs


What is a trading bloc?

An agreement between states, regions or countries to reduce barriers to trade between the participating regions


How can trading blocs vary?

They can vary from two countries reducing tariffs on each other's goods/ reducing bureaucracy by simplifying import/export procedures to full blown economic and monetary union


What does a simple free trade agreement involve?

A reduction in current tariff and non-tariff import controls in order to liberalise trade in goods and service between countries


What does a free trade area involve?

No internal trade barriers


What does a customs union involve?

No internal trade barriers and a common external tariff


What does a single market involve?

No internal trade barriers, a common external tariff and factor and asset mobility


What does a monetary union involve?

No internal trade barriers, a common external tariff, factor and asset mobility and a common currency


What does an economic union involve?

No internal trade barriers, a common external tariff, factor and asset mobility, a common currency and common economic policy


What is a free trade area and what are the effects?

Countries agree to remove tariff and non-tariff barriers between them to promote free trade in goods and services, the effect is a gain in consumer surplus and a country can consume beyond its PPF


What is a customs union?

Countries agree to abolish tariffs and quotas between member nations to encourage the free movement of goods and services and countries agree to adopt a common external tariff on imports from non-member countries


What is an example of the customs union in action?

Goods and services that originate in the EU circulate between member states duty-free however these products might be subject to other charges such as excise duty or VAT


What does a customs union lead to?

Trade diversion


What does the common external tariff in a customs union prevent?

Countries imposing their own unilateral tariffs on different products that differ from other nations in the customs union


What is a single market?

It involves the free movement of goods and services, capital and labour (i.e. the four factors of production) and the concepts are broadened to encompass economic policy harmonisation such as in areas of health and safety legislation