There is lots of information available online about the UK’s FTAs, both within and outside the EU. MERCOSUR – Argentina, Brazil, Paraguay, Uruguay and Venezuela are full members, Bolivia, Chile, Colombia, Ecuador and Peru have associate member status, with Bolivia becoming an accessing member in December 2012.NAFTA (the North American Free Trade Agreement) which covers Canada, the United States of America and Mexico.CEFTA – The Central European Free Trade Agreement which covers Albania Bosnia and Herzegovina Croatia Former Yugoslav Republic of Macedonia Moldova Montenegro Serbia UNMIK/Kosovo.EEA – The European Economic Area EU members plus the three EFTA states of Iceland, Norway and Liechtenstein.EFTA – European Free Trade Association with member countries Iceland, Liechtenstein, Norway and Switzerland.The EU combined is amongst the world’s biggest exporters and around two thirds of EU countries’ total trade is done with other EU countries This is the most important trade bloc in Europe. The best-known examples of trading blocs in Europe are: This is a customs union in which the members also agree to reduce restrictions on the movement of factors of production – such as people and finance – as well as reducing barriers on the sale of goods.Ī common market which is taken further by agreeing to establish common economic policies on such things as taxation and interest rates and, even, a common currency. They maintain their own individual tariffs and quotas with respect to non-members.Ĭountries that belong to customs unions agree to reduce or abolish trade barriers between themselves and agree to establish common tariffs and quotas with respect to outsiders. Members agree to reduce or abolish trade barriers such as tariffs and quotas between themselves. Read Open to Export’s general introduction to how world works for further information. While the formation of trade blocs, such as the European Union and NAFTA (North American Free Trade Agreement), has led to trade creation between members, by the same token it is also harder for countries outside the bloc to trade, leading to what is called trade diversion, where a company that otherwise might have got the business in that country is prevented from doing so because of a trading bloc and the barriers in place for non-member countries. They can also ensure access to competitively priced imports from other countries. International trade agreements can open up new opportunities for exporters. The idea is that member countries freely trade with each other, but establish barriers to trade with non-members, which has had a significant impact on the pattern of global trade. One of them is through trading blocs.Ī trading bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organisation, where regional barriers to international trade, (tariffs and non-tariff barriers) are reduced or eliminated among the participating states, allowing them to trade with each other as easily as possible. There are a variety of ways in which countries can “protect” their domestic economies from competition from abroad.
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