Trading Blocs
Business: BTEC Level 3 National Extended Diploma, topic 4.3.5
Regional Trade Blocs
Regional trade blocs are intergovernmental groups that reduce the barriers to trade in their region.
European Union
- The European Union is a trade bloc made up of 28 European nations (as of 2018).
- The European Union is the most tightly integrated trade bloc, because it combines common external tariffs, with the free movement of labour and for many nations, a common currency in the Euro.
NAFTA
- The North American Free Trade Agreement (NAFTA) is a trade bloc made up of the USA, Canada and Mexico.
- NAFTA supports free trade between its three members. Removing internal quotas and tariffs is the aim of the organisation.
- NAFTA does not have common external tariffs on nations outside the 'customs union' or 'trade bloc'.
ASEAN
- The Association of Southeast Asian Nations is a trade bloc of 10 Asian countries, including Indonesia, Malaysia, Singapore, the Philippines, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.
Mercosur
- Mercosur is an economic grouping of Argentina, Brazil, Paraguay and Uruguay.
- It was established by the Treaty of Asuncion in 1991.
- Mercosur does have an external tariff on goods from outside the trade bloc.
COMESA
- COMESA is a grouping of 19 countries in east and southern Africa.
- Its members include Kenya, Libya, Egypt, Madagascar, Mauritius and Zambia.
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).
Test yourself on Trading Blocs
Kenya, Libya, Egypt, Madagascar, Mauritius and Zambia are the members of what regional trade bloc?
Which of these nations are part of ASEAN?
Which of these nations are part of Mercosur?
Which of the following differentiates a 'customs union' and a 'free trade area'?
Which of the following are features of a customs union?