Customs Unions & WTO

Customs Union

A customs union is a group of countries who agree to remove barriers to trade between the union and enforce common trade barriers to those outside of the union.

Tariffs

There are usually no tariffs or quotas between members of a custom union.
There is usually a common tariff on goods coming from countries outside of the customs union.

Regulations

Quality regulations are usually standardised within a customs union and people outside the union have to meet these regulations.

Different to a free trade area

A customs union is a step up on a free trade area, the key difference being that in a free trade area there are no common external tariffs.

European Union

The European Union is the most famous example of a modern customs union. But there are others including the Southern African Customs Union (which includes Namibia, Botswana and South Africa).

The European Single Market

The European Single Market is a customs union where all internal borders and between country restrictions have been removed.

Features of the European Single Market

The European Single Market has all the features of a customs union in addition to a number of other features:
- Free movement in goods and services. In almost every case, goods sold in one country are available to all other countries.
- Free movement of people. People are able to live and work in different countries in the single market.

Features of the European Single Market (cont.)

Free movement of money between member countries.
Agreed standards and regulations for all goods and services produced in the single market.
Members agree not to set rules or make laws that favour their own domestic firms, products or workers over other countries in the market.

Consequences of EU membership

European Union membership implies membership of the European Single Market and so all the features the market entails. In particular the freedom of movement of goods, services, people and money.
Members also agree to the rules of the customs union including the common external tariffs.
Members must accept laws and rulings from EU institutions including the European Court and Parliament.

Brexit

There were two key battlegrounds in the lead up to the Brexit vote.
- Firstly, the free movement of people – which many believed had led to increased immigration into the UK, higher unemployment and higher costs for the government in supporting immigrants through benefits and government run services including schools.
- Secondly, autonomy over laws – a number of Brits argued in favour of Brexit as it would mean that the UK would no longer have to accept the laws and rulings of the EU parliament and court.

Brexit (cont.)

But lots of NHS workers come from the EU and lots of the goods (like BMW cars) that we purchase are bought tariff-free from EU countries.

World Trade Organisation

The World Trade Organisation (WTO) is where countries meet to try and negotiate a reduction in trade barriers. Lower trade barriers can help to encourage specialisation and increase global output.

GATT of 1947

Many countries came together to form the General Agreement on Tariffs and Trade (GATT) in 1947.

Rounds of negotiation

Since 1947, the negotiations have happened in rounds.
Countries will negotiate one agreement, then come back some time later and negotiate another agreement.

The WTO now

The role of the WTO is still to encourage free trade, to provide a forum to resolve trade disputes, to lower tariff barriers.
The Most Favoured Nation Principle (MFN) says that any tariff reduction offered to one country must be offered to all (against trade discrimination).
The WTO Began with 23 members, and now has 163 members.
But the WTO is under threat from, in particular, the US' more protectionist stance.

1Microeconomics

1.1Competitive Markets: Demand & Suply

1.1.1Markets & Demand

1.1.2Diminishing Marginal Returns

1.1.3Supply

1.1.4Market Equilibrium

1.1.5Price Mechanism

1.1.6Consumer & Producer Surplus

1.1.7IB Multiple Choice - Demand

1.1.8IB Multiple Choice - Supply

1.2Elasticity

1.2.1Elasticities of Demand

1.2.2Factors Affecting Price Elasticity of Demand

1.2.3Elasticity of Supply

1.2.4Price Elasticity of Supply

1.2.5IB Multiple Choice - Price Elasticity of Demand

1.2.6IB Multiple Choice - Price Elasticity of Supply

1.2.7IB Multiple Choice - Other Elasticities

1.3Government Intervention

1.3.1Indirect Taxes & Subsidies

1.3.2Application Question - Taxing Prices or Quantities

1.3.3Subsidies & Price Controls

1.3.4Deadweight Loss & Government Intervention

1.3.5Elasticity & Tax Incidence

1.3.6IB Multiple Choice - Government Intervention

1.4Market Failure

1.4.1Types of Market Failure

1.4.2Introduction to Externalities

1.4.3Negative Externalities

1.4.4Policy for Negative Externalities

1.4.5Positive Externalities

1.4.6The Deadweight Welfare Loss of Externalities

1.4.7Case Study - The Externalities of Education

1.4.8Public Goods & the Free-Rider Problem

1.4.9Asymmetric Information

1.4.10End of Topic Test - Market Failure

1.4.11Application Questions - Market Failure

1.5HL: Theory of the Firm & Market Structures

1.5.1Theory of the Firm & Market Structures

2Macroeconomics

2.1The Level of Overall Economic Activity

2.1.1The Circular Flow of Income

2.1.2Defining GDP

2.1.3Limitations of GDP

2.1.4IB Multiple Choice - Economic Indicators

2.1.5Business Cycles

2.1.6Output Gaps

2.2Aggregate Demand & Aggregate Supply

2.2.1The Aggregate Demand Curve

2.2.2Components of Aggregate Demand

2.2.3Shape of the Aggregate Demand Curve

2.2.4Shifts in Aggregate Demand

2.2.5IB Multiple Choice - Aggregate Demand

2.2.6Short & Long-Run Aggregate Supply

2.2.7Alternative Models of LRAS

2.2.8Equilibrium in the AD-AS Model

2.2.9Output Gaps & the AD-AS Model

2.3Macroeconomic Objectives

2.3.1Introduction to Unemployment

2.3.2Limitations of Unemployment

2.3.3Types of Unemployment

2.3.4Causes & Impact of Unemployment

2.3.5Defining Inflation

2.3.6Measuring Inflation

2.3.7Use of Index Numbers

2.3.8The Consumer Price Index

2.3.9Consequences of Inflation

2.3.10Causes of Inflation

2.3.11Inflation & Unemployment Tradeoff

2.3.12The Short-Run Phillips Curve

2.3.13The Long-Run Phillips Curve

2.4Economic Growth, Poverty & Inequality

2.4.1Measuring Economic Growth

2.4.2Determinants of Productivity

2.4.3Economic Growth & Productivity

2.4.4Absolute & Relative Poverty

2.4.5Inequality

2.4.6Inequality 2

2.4.7Lorenz Curve

2.4.8Government Policy on Poverty

2.4.9End of Topic Test - Poverty & Inequality

2.4.10Application - Inequality & Poverty

2.5Fiscal Policy

2.5.1Introduction to Fiscal Policy

2.5.2Fiscal Policy and AD-AS Model

2.5.3Fiscal Policy Lags

2.5.4Automatic Stabilizers

2.5.5IB Multiple Choice - Fiscal Policy

2.6Monetary Policy

2.6.1Objectives of Monetary Policy

2.6.2Monetary Policy Implementation

2.6.3Monetary Policy & AD-AS Model

2.6.4Monetary Policy Lags & Pitfalls

2.7Supply-Side Policies

2.7.1Supply-Side Policies

2.7.2Supply-Side Policies 2

3The Global Economy

3.1International Trade

3.1.1Globalisation

3.1.2Globalisation for LEDCs

3.1.3Globalisation for MEDCs

3.1.4Comparative Advantage & Trade

3.1.5Protectionism

3.1.6Arguments for Protectionism

3.1.7Arguments Against Protectionism

3.1.8End of Topic Test - Globalisation & Trade

3.1.9Case Study - Globalisation & Trade

3.2Exchange Rates

3.2.1Floating Exchange Rates

3.2.2Fixed Exchange Rate

3.2.3Effect of a Stronger & Weaker Dollar

3.3The Balance of Payments

3.3.1Balance of Payments

3.3.2Balance of Payments 2

3.3.3FDI & Reducing a BoP Deficit

3.4Economic Integration

3.4.1Customs Unions & WTO

3.4.2Merged Currency

3.5Terms of Trade

3.5.1Absolute & Comparative Advantage

3.5.2Gains from Trade

3.5.3Terms of Trade

3.5.4IB Multiple Choice - Comparative Advantage & Trade

3.6Economic Development

3.6.1Factors Influencing Growth & Development

3.6.2International Institutions

3.6.3Measures of Development

3.6.4Barriers to Development

3.6.5Case Study - The Bottom Billion

3.6.6End of Topic Test - Emerging & Developing

3.7The Role of Domestic & International Factors

3.7.1Interventionist Strategies

3.7.2Development Strategies

3.7.3Development Promotion Policies

3.7.4End of Topic Test - Growth & Global Development

3.7.5Application Questions -Growth & Global Development

3.8The Role of International Trade

3.8.1International Institutions

3.8.2End of Topic Test - Globalisation & Trade

3.9The Role of Foreign Aid

3.9.1Aid

3.9.2Limitations of Aid

3.9.3Support for Aid

3.9.4Application Questions - Developing Countries

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