Trading Blocs

Trading Blocs

1. EU

   • UK, Germany, Greece
   • 500,000,000 population
   • Main trade = largest importer of goods and services
   • X = £3.6m M = £3.7m

2. ASEAN

   • Indonesia, Singapore, Vietnam
   • Main trade = exporting natural resources e.g. oil & copper
   • 600,000,000 population
   • X = £750000 M = £690000

3. APEC

   • US, Japan, Indonesia
   • 2,600,000,000 population
   • Main trade = exporting machinery
   • X = £5.1m M = £5.3m

4. Types of trading blocs

   • Free trade area
   • Customs union
   • Common market
   • Monetary union

5. Disadvantages of trading blocs

   • Distracts government from gains of joining WTO
   • Some blocs distribute the gains unequally between developing and developed countries
   • Can reduce output as more trade diversions are made rather than trade creations

6. Advantages of trading blocs

   • Prevent strong exporters from ruining domestic producers
   • Brings dynamic gains due to reduced isolation
   • There is choice of blocs, desire for less restrictions would lead a country to NAFTA, instead of EU