#Trading blocs are groups of countries quizlet free#

For example, countries can set up a free trade agreement that applies only to goods traded within the group Together, those three agreementsР вЂќР’В¬over all three main areas of trade handled by the WTO. Principle is handled slightly differently. Property Rights (TRIPS) (Article 4), although in each agreement the (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual MFN is also a priority in the General Agreement on Trade in Services Is so important that it is the first article of the GeneralР вЂќР вЂћgreement on Tariffs and Trade (GATT), which governs trade in goods. This principle is known as most-favoured-nation Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members. If a trading bloc develops into a common market, the factor mobility across the countries improves allocation of resources.Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners. Better use of factors of production: Improved resource allocation Trading bloc can attract multinational corporations.Р вЂќРўС’. Outside firms can escape the tariff and other protection imposed by the trading bloc on imports from outside. When opening up to free trade with other countries, its exports are likely to increase (assuming it is a relatively efficient producer), and as the size of the market expands, firm can achieve lower costs of production on average, lower prices for consumer and greater export competitivenessР вЂќР’В®nlarged markets often give rise to increasing investment from internal and external (from a country outside the trading bloc) to take advantage of large market size. In a small market, a firm cannot take advantage of economies of scale since a firm cannot grow large enough, so that its long-run AC begin to fall. Thereby, increase in efficient producers and lower prices for consumers and improved allocation of resourcesР вЂќР вЂћbility of firms to sell beyond national boundaries, increasing exports and economic growth With low or no barriers, imports increase, forcing domestic producers to compete with lower cost producers from other countries. The removal of trade barriers results in increased competition among producers in member countries. Factor mobility across countries improves the allocation of resources.Р вЂќР’ВISADV: Requires even greater policy co-ordination among members than in a custom union, and willingness of gov to give up some of their policy making authority to achieve co-ordination.Р вЂќР’В¬ommon currency, harmonized tax rates, common monetary and fiscal policy European Economic Community (ECC), Carribean Community (CARICOM)Р вЂќР вЂћDV: Workers are free to move and work in any countries, free movement of capital without restrictions that results in a better use of FOP. FOP including labour and capital, are free to cross the borders and move, travel to find employment freely within all member countries.Р вЂќР’В®x.

#Trading blocs are groups of countries quizlet plus#

Common external policy plus elimination of all restrictions on movements of any factors of production within the common market.

Central European Free Trade Agreement (CEFTA), Pacific Regional Trade Agreement (PARTA)Р вЂќР вЂћDV: No complicated 'Origin of rules' since members have common external tarrifsР вЂќР’ВISADV: Must co-ordinate their policies toward non-members (There might be disagreements)Р вЂќР’В¬ountries that have formed custom union further proceed to eliminate any remaining barriers to trade between them.

The member countries of the customs union act as a group in all trade negotiations and agreements with non-members, thus invloves a higher degree of economic integration than FTA.Р вЂќР’В®x. North American Free Trade Agreement (NAFTA) (Canada, Mexico and US), Association of Southeast Asian Nations (ASEAN)Р вЂќР’ВISADV: As each country has its own indiv, barriers toward non-members, it creates difficulty for those countries with higher barriers because they end up importing more of the good than they would like Р Р†РІР‚В РІР‚в„ў 'Rules of origin' for imports, designed to prevent goods from entering countries with lower external barriers.Р вЂќР’В¬onsist of a group of countries that fulfill the requirements of a free trade area (elimination of trade barriers between members) and in addition adopts a common policy (common external barriers) towards all non-member countries. In trade relations to members, there are free trade in some products and some protection on other products.Р вЂќР’В®x. Each member country has the right to pursue its own trade policy towards other non-member countries. Consists of a group of countries that agree to gradually eliminate trade barriers themselves (most common).