4.1.5 Trading Blocs

• • A trading bloc is a group of countries that form an agreement to reduce or eliminate protectionist measures between each other
• Trading Bloc Examples

  • The European Union (EU)
  • ASEAN
  • NAFTA
• The Benefits for Businesses Inside the Bloc

  • Access to more markets - Businesses can sell to more customers due to free movement of goods
  • An external tariff wall is a tax applied to imported goods by a group of countries that have formed a trade agreement
  • Free movement of labour - Trading blocs may also have free movement of labour allowing businesses to source workers from a wider pool
• The Drawbacks for Businesses Inside the Bloc

  • Increased competition - There is increased competition for businesses within the trade bloc which may be more of an issue for small businesses as they have less resources available with which to compete
  • Retaliation - External tariffs set against countries outside of the trading bloc may lead to retaliation from these countries