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#Types of trade blocs free

Result in conflicts between different trading blocs and increased protectionismīetween blocs e.g CAP in EU - tariffs and subsidies, dumping.

#Types of trade blocs free

Contradict the Most Favoured Nation clause of WTO - however there are exceptions when it comes to the development of free trade area (trade blocs) - for example ASEAN development such as Thailand opening up its vehicle industry to allow imported components from within the ASEAN region but USA may feel not being treated equally.Lead to inefficient allocation of resources e.g.However forming own trade blocs - Russia's membership of new Eurasian Economic Union (EEU) - a customs union, Monaco (tax free haven)/Switzerland/Norway's (oil) success outside EU Have adverse effects on those countries who do not belong to them Russia or Turkey and EU.Poland's entry to EU as EU's grain basket. Distort world trade Factory Asia 50% of world manufacturing, development of comparative advantage hard to compete against for LEDC's - problems with South American countries gaining access to NAFTA markets or African to EU to develop comparative advantages.Specific examples of trading blocs conflict with the objectives of the WTO should be evident. Evidence of understanding of how the WTO operates should be evident - decisions made at WTO meetings USA+EU+Japan v BRICS +LEDCs but they need in the end to agree as consensual view so compromise, examples of WTO decisions. promoting world trade through the reduction in trade barriers.The objectives of the World Trade Organisation should be explained i.e. To what extent = how significant! This means you do not always have to counter your point - you can say it is really significant in support of your point or it is relevant but very low significance compared to something else. (b) To what extent might the policies of trading blocs conflict with the objectives of the *trading bloc development provides benefits/costs e.g EU single market, single monetary and possibly fiscal policy - immigration control, over demand side policies. * Trade diversion rather than trade creation.

* Lack of integration - mergers within blocs. * Problems with comparative advantage theory. * Risk of blocs breaking up - UK leaving EU, Euro instability -PIIGS exit risking break up.

Greater choice and lower prices for consumers.Įvaluative points: *what else is happening inthe world economy - financial crisis, oil volatility.

Possibility of benefiting from economies of scale.

Benefits resulting from above (law of comparative advantage).

Increased specialisation and trade within the bloc.

Up to three points should be considered and evaluated with specific reference to a blocs and a country in the world economy e.g UK and EU Different types of blocs - free trade area (NAFTA), customs union - MERCOSUR . Reductions but excluding countries not in the bloc e.g. Objectives of the World Trade Organisation?Ī) The meaning of a trading bloc should be made clear i.e. (b) To what extent might the policies of trading blocs conflict with the (a) Discuss the benefits to a country of belonging to a trading bloc. (2) ‘Trading blocs are becoming increasingly important in the world economy.’