ipl-logo

Advantages And Disadvantages Of Trade Blocs

932 Words4 Pages

TRADE BLOCS

A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, (tariffs and non-tariff barriers) are reduced or eliminated among the participating states . We can also say that the meaning of trading blocs is a group of countries that exist within a geographical region with the motive to protect themselves from the import of non – members . It can also be seen as a form of economic integration that is increasingly shaping the pattern of world trade .
Major types of Trade Blocs :-
1. Preferential Trade Area :- Preferential Trade Areas (PTAs) exist when countries within a geographical region agree to reduce or eliminate tariff barriers on selected …show more content…

4. Jobs :- Jobs may be created as a consequence of increased trade between member economies as trade involves various operations including manufactuting , packaging , transporting , etc .
5. Protection :- Firms inside the bloc are protected from cheaper imports from outside, such as the protection of the EU shoe industry from cheap imports from China and Vietnam.

Main Disadvantages of trading blocs

1. Loss of benefits :-The benefits of free trade between countries in different blocs is lost as it includes regions in a particular geographical region and different blocs have different policies and rules .

2. Distortion of trade :- Trading blocs are likely to disrupt and distort the world trade reducing the beneficial effects of specialisation and the exploitation of comparative advantage that could have easily led to an increase in profits or good level of business among different countries .

3. Inefficiencies and trade diversion :- Inefficient producers within the bloc can be protected from moreefficient ones outside the bloc. For example, inefficient European farmers may be protected from low-cost imports from developing countries. Trade diversion arises when trade is diverted away from efficient producers who are based outside the trading

Show More
Related

  • How Does Globalization Affect Canada

    1226 Words  | 5 Pages

    Reducing trade restrictions such as imported taxes (known as tariffs) allows for the transfer of goods, services, and investments to be free across national borders. Canada, United States and Mexico already have an agreement through NAFTA (North American Free Trade Agreement). The importance of globalization, however, is free trade throughout the world. Goods, services and investments move freely to find the most competitive environment so that customers and investors benefit. This kind of environment depends on several factors such as labor costs, government regulations like environmental controls on manufacturing, and the value of a nation's currency.

    Read More

  • The Negative Effects Of The Triangular Trade

    628 Words  | 3 Pages

    During the 1600's there was massive amounts of trade between Europe, America and Africa called the Triangular trade or the Columbian exchange named after Columbus. The Triangular trade was influential for every single continent, even ones not involving Europe, America or Africa. This trade had positive and negative effects on all continents. Europe, Americas and Africa all experienced great economic and population growth. North America gained crops like coffee beans, sugarcane and livestock which caused their economy to grow.

    Read More

  • Sugar Changed The World By Marc Aronson And Marina Budhos

    800 Words  | 4 Pages

    The authors continue in contradicting this idea of a three-way, triangular trade system by calling it “misleading”. They explain how the trading system has many more factors and is much more than just a “triangle”. “What we call a triangle was really as round as the globe. (37)” The authors give direct evidence of a much more complicated trading system involving many countries.

    Read More

  • Does Globalization Contribute To Sustainable Prosperity Essay

    836 Words  | 4 Pages

    Comparatively the North American Free trade agreement has done quite a bit to open up trade. It was signed 1989 but it really started working Jan 1st 1994, from 1994 till 2000 exports from Canada to the US rose by over 150 billion dollars. The NAFTA has created more than 3 million jobs. That had a huge impact on sustainable prosperity jobs were created and the economy was booming. The European Union also has created a liberalized trading area which has made the world nearly completely free which has benefited numerous people in many different

    Read More

  • Case Study Qnt 561 Week 3 Tax Trouble

    1218 Words  | 5 Pages

    Question 4.2 Advantage of bilateral and regional trade agreement 1. Bilateral and regional trade agreements increase trade between the two countries. They open markets to successful industries. As companies benefit, they add jobs 2. They are easier to negotiate than multilateral trade agreements since they only involve two

    Read More

  • The Pros And Cons Of The World Trade Organization

    1735 Words  | 7 Pages

    Economic Global Governance WORLD TRADE ORGANIZATION: WHY IS IT BAD FOR YOU? Is The World Trade Organization really bad or is it because of the different perceptions of every individual regarding to the organization? Or is it really bad in its own nature? Well for me, I think the WTO is bad because of the different agreements that was set by them have many lapses in every agreements that has been done, there are also many issues that arises because there are some critics of the WTO, they argue that “subtle biases operate within the decision making structures that systematically favor developed countries over developing ones.

    Read More

  • Differences Between Globalism And Nationalism

    825 Words  | 4 Pages

    Economic benefits further advance the global economy, “Businesses can communicate efficiently and effectively with their partners, suppliers, and customers and manage better their supplies, inventories, and

    Read More

  • Pros And Cons Of International Trade

    751 Words  | 4 Pages

    Introductions International trade refers to a country trade goods and services to another country. International trade open up the world potential market to increase producer sales quantity and increase competition on foreign country. apart from these, international trade will create job opportunity and hence reduced unemployment rate as well as positive balance of payment. however, it might bring negative effects to a country as well, therefore, government play an important role in implementing trade restriction on imported goods in order to prevent imported goods destroy the domestic market or at certain extend, monopolize the market. 94 words A ) Discuss the forms of restriction on international trade.

    Read More

  • Protectionism Essay

    2919 Words  | 12 Pages

    Protectionism is coming to us from all directions, and numerous nations are using both direct and indirect barriers to trade, as when they require to do so. What economists mostly talk about are the threats of protectionism, rather than its benefits and how protectionism isn’t a long term solution. By now we have understood that protectionism, whether we like it or not, is used in certain economic situation by every other country, but it shouldn’t be seen as a permanent solution. Protectionism is a superficially convincing concept, because we can immediately point out the number of jobs saved, lesser no of imports etc. but it slightly more difficult to see the benefits of free trade in numbers, but one country’s protectionist policies will not just hurt their trading countries exports.

    Read More

  • The Pros And Cons Of Washington Consensus

    2326 Words  | 10 Pages

    The term “Washington Consensus” was created in 1989. It was first used in a background paper for a conference to examine the extent to which the old ideas of development economics (Williamson 2010). In order to ensure that it addresses the common set of issues, John Williamson made a list of ten policies that he thought the majority in Washington would agree were needed and labelled it the “Washington Consensus.” Williamson thinks that it would be a good policy to help the debtor countries overcome their debt burden with the changes in economic policy. 1.2

    Read More

  • The Pros And Cons Of International Trade

    1011 Words  | 5 Pages

    In the contemporary society, there are an increasing number of people involved in the globalisation. I choose the topic of international trade. And in the following paragraphs, I am going to introduce what is international trade, other possible benefits of trading globally and the bottom line. (Heakal 2015) Thanks to the international trade that allows us to expand the market for goods and services.

    Read More

  • The Causes Of Globalization In Europe In The 20th Century

    1193 Words  | 5 Pages

    Throughout the twentieth century, countries were creating treaties, trade blocs and global governance institutes to promote open market and free trade. Europe’s golden age of trade with very low tariff and high economic development began mid-19th century and collapsed

    Read More

  • Advantages And Disadvantages Of Global Trade And International Trade

    998 Words  | 4 Pages

    International trade is also knows as a globe trade which give the country opportunity to expands their markets for both good and services that otherwise may not have been available in other countries. This type of trade also give advantages for world to rise the economy in term of prices, supply and customer demands, affect and are affected by global events. All of the good and services can be found on international market. International trade will involve two types of process which be export and import. Export is a function of international trade in which the goods produced in a country will be sent to another country for future sale or trade.

    Read More

  • Globalization And Nations

    1615 Words  | 7 Pages

    At the same time, the world has also become interdependent due to trade relations. Major countries in the world trade with each other so as to ensure maximum productivity. Trade laws have been established through international organizations dictating the extent of trade relations. Imports

    Read More

  • Mercantilism In Africa

    2052 Words  | 9 Pages

    Nations engage in international trade because they benefit from doing so. The gains from trade arise because trade allows countries to specialise their production in a way that allocates all resources to their most productive use. Trade plays an important role in achieving this allocation because it frees each and every country’s residents from having to consume goods in the same time combination in which the domestic economy can produce them. During the past decade, China’s growing presence in Africa has increasingly become a topic for debate in the international system and among economists as well as policy analysts.

    Read More

More about Advantages And Disadvantages Of Trade Blocs

Open Document