Trading Blocs and the EU

define a trading bloc

a trading bloc is a group of countroes who decide to trade freely with eachother.

what are the three types of trading blocs and how they work

1. free trade area, trade barriers have been removed but still have autonomy on own barriers

2. customs union. no barriers between members but a common external tariff

3. common market. free movement, external tariff and no barriers to trade inside.

how many memebers are in the EU and how many are in the sigle currency

eu memebers, 27

single currency, 20 members, croatia most recent

what type of trading block is the EU

the EU is a common market which can be defined as a protected free trade area where there are no internal barriers to trade with a common external tariff to imports outside the union

what are five beneifts to being in a trade bloc

1. increased competition, lower prices and more efficient

2. increased free trade, specialisation

3. gains in FDI, access to single market

4. ecinomies of scale, access to larger market to grow firm

5. transaction costs fall, removal of tariffs reduces costs for firms to trade

costs of trade blocs: EU 4

cost: joining a EU requires a large amount of fuding

intergration with less developed countries. Poland and Bulgaria, negitive implications as FDI moves to lower AC country often less developed

contagion. of one fails it negitively impacts the other, Greece

net contributor. countries such as fance and gernamy pay more for less of a return as LEDC’s require more funding

trade diversion. customers have to buy at a higher price for a good or service as they have to consumer inside the block or face a tariff price.