Essay Disadvantages Of Trade Blocs

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A trade bloc is an agreement where the different states, regions or countries comes together to participate so that the barriers to trade like tariffs and non-tariff barriers are reduced or being eliminated regionally. So they assemble as a group which is in a geographical area and they are recognised as participating states and are able to safeguard themselves from imports from non-members. These trading blocs are a type of economic integration and these blocs help in shaping the way how world trade occurs. Now there are different types of trading blocs which we will discuss further. First is Preferential Trade Area also known as TRAs. In this type of area, countries which are participating together select goods on which the tariff barriers…show more content…
So there is trade creation because of trading bloc and this helps in trading goods at lower prices than the price which is charged by domestic producers which is generally high. The imports tend to be more efficient. As he price is lower so consumption increases and this leads to increase in demand. Due to increase in trade, there is opportunity of people who want jobs and employment opportunities also increases. Also there are economies of scale as there are lower prices and lower costs for the consumers. Now talking about the main disadvantages of these trading blocs, there is loss in the opportunities for the members who can trade with other trading blocs. These blocs can also mislead world trade and can reduce the benefits of exploiting more of comparative advantage with different countries. Also the producers which are inefficient ones will get protected than the producers which are more efficient outside the trading bloc. Major trade blocs in the world are European Union (EU) which is the world largest trading bloc. It has six member countries who are participating which are Germany, Belgium, Italy, France, Luxemburg and Netherlands. It is common market type of trading

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