define WTO?
policies free trade agreements and decides on trade disputes between countries
customs union definition?
countries that operate free trade with each other and impose a common external tariff
European union definition?
economically intergrated group of 28 member states
Intra-regional trade definition?
the exchange of virtually identical products between countries within the same region
regionalisation of trade definition?
an increase in the intensity of trade and investment between countries within the same region
Trade creation definition?
there are welfare gains from lower import tariffs from within the customs union
trade diversion definition?
there are welfare losses from higher import prices from outside the customs union becuase of the effects on an import tariff
what are trading blocs?
groups of countries in specific regions that manage and promote trade activities.
what do trading blocs lead to?
trade liberalisation and trade creation between members
Features of a custom union?
- common set of import duty rates
- duty and quota free movement between members
- safety measures from imports of third parties
What is a free trade area FTA?
one where there are no tariffs or taxes or quotas on goods/services from one country to another
examples of free trade areas?
European Free trade association EFTA
Examples of trading blocs?
EU, NAFTA
Main features of European economic and monetary Union?
- single european currency
- co-ordination of macro- economic policies
- single interest rate
Advantages of EMU?
- elimination or transaction costs
- price transparancy
- easier trading condition
- reduced travelling costs
disadvantages of EMU?
- changeover costs
- higher prices for consumers
- consumer confusion
- unstable currency
- higher unemployment
What is the single european market (SEM)?
- free movement of goods, services, capital, labour which promotes deeper economic intergration and market liberalisation
What is the differance between custom union and single market ?
- customs union shares the revenue from the common external tariff in pre determined way
- single market represents a deeper form of economic integration than a customs union
What is trade diversion?
switch from lower cost foreign suppliers of a customs union towards a higher cost supplier located inside the customs union
WTO role?
helps promote free trade by persuading countires to lower their import tariffs and other barriers to open markets
challenges for WTO?
- complexity of production (countries specialising, comparative advantage)
- shifting global economic power
- rising slowbalisation
