1b. Trading blocs

What is meant by: Trading Bloc?

Trading blocs are formed when countries join together and all agree to remove trade barriers between each other.

What is meant by: Four Types of Trading Bloc?

The four types of trading bloc are; Free Trade Areas, Customs Unions, Common Markets, Monetary Unions.

What is meant by: Free Trade Area?

Trade barriers are removed between member countries.

What is meant by: Common External Tariff?

Where members of a trading bloc must all have the same tariffs on external non-member countries.

What is meant by: Customs Union?

Trade barriers are removed between member countries and there is a common external tariff placed on countries outside the trading bloc.

What is meant by: Common Market?

Trade barriers are removed between member countries and there is a common external tariff placed on countries outside the trading bloc and factors of production can move freely between countries.

What is meant by: Monetary Union?

Trade barriers are removed between member countries and there is a common external tariff placed on countries outside the trading bloc and countries share a common currency.

What is meant by: The European Union?

The European Union is a customs union with 27 member countries. They have removed trade barriers between each other and share a common external tariff with non-EU countries.

What is meant by: The European Single Market?

The European Single Market is a common market, which means that factors of production, like labour, can move freely between the 31 countries.

What is meant by: The Eurozone?

The Eurozone is a monetary union meaning that all 20 of its members have adopted a common currency - the Euro.

What is meant by: Trade Creation?

When the removal of tariffs means that the quantity of imports increases and trade is created.

What is meant by: Trade Diversion?

When the creation of a trading bloc means that trade is diverted from low cost producers outside the bloc to high cost producers inside the bloc.