Types of trading blocs

Free trade area

where countries agree to remove trading barriers within blocs but maintain separate trading arguments with other countries outside their blocs

-eg) US, Canada, Mexico

customs union

Has free trade among members and the same tariffs on other non-member countries → called common external tariff

- free movement of labour between member countries

- safety measures for all imports for all members

-common trade policy - guides trading relationship

-eg) EU

common market

the same as a customs union but allows free movement of resources between countries

currency union

extends the feature of a common market by adopting a single currency

-eg) ECB European central bank

Single European market

-free movement of goods, services, capital, labour between memebers

costs of trading blocs

benefits of trading blocs

-creates more free trade = lower costs for consumers

-better price transparency means