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Examine the causes and consequences of the emergence of large trading blocs in recent years.

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Introduction

A-level Geography -Trading Blocs (a) What is meant by the term trading bloc? [5] A trading bloc is defined as a group of countries which combined together share trade agreements. There are two types of trade agreements partaken in by the members of these blocs. The first types of agreements are internal free trade agreements which promote trade between member countries by the removal of protectionist. This encourages trade within the bloc by lowering the internal trade costs. The second types are agreements which restrict trade outside of the bloc by imposing protection such as tariffs on foreign trade. These discourage trade with countries outside the bloc as these polices raise the cost of this trade. There are a large number of trading blocs spanning over the different areas of the globe. The two largest in terms of GDP per head in $ are the EU and NAFTA. The EU is the European Union which is a grouping of the countries of Europe and NAFTA also known as the North American Free Trade Association which is a grouping of the USA, Canada and Mexico. The presence of trading blocs encourage countries to buy good available within the bloc from the bloc's countries due to lower costs and only trade outside of the bloc goods which are not available at a cheaper price within. ...read more.

Middle

One of the largest causes for the emergence of so many trading blocs across the globe is the factor that countries not in trade blocs join or create others in the aim of countering the world economic power share which is being controlled by member countries of trade agreements. This factor is one of the main reasons for the creation of the world's second largest trade bloc NAFTA. The countries of the north and Central American continent who felt threatened by the great and growing economic power of the EU decided to join together in a pact of trade agreements so they as well could gain the benefits of regional free trade. The EU was the first large trade bloc to emerge but its demonstration of the power a bloc can have has threatened many major economic powers and this threat has lead to the creation of many new trading blocs. The emergence of trading blocs has had good and bad effects on the world trade and more regional environments of the world. A major good consequence of the emergence of blocs is that much trade has been created by their presence. This though is not without problems as though overall trade for the member countries is increased those outside the bloc often divert their trade from the area or lose customers from within as members find cheaper alternatives from member leading to damage to external countries economies and overall trade between different regions of the world. ...read more.

Conclusion

this country to become prosperous and begin to use resources which were not before used and therefore make resource use more efficient thought the whole area. Again this factor could be more effective in world terms if not blocked by barriers between trade blocs. Overall trading blocs have recently emerged throughout the world recently for many reasons, many which are orientated around the benefits brought about my free trade and other which are based around other factors such as political stability. These blocs have many advantages and disadvantages. The advantages are as varied as the causes but there are still many based around the presence of free trade. The disadvantages of these blocs are again varied but many are based around the problem that though a trading bloc encourages the advantages of free trade it only does this to a point as they will in the end in my view hinder the progress towards free trade as protectionist barriers between blocs will replace those between countries which before caused problems. In my view though trading blocs are a good thing for world trade and the countries of the world as when full efficiency is reached within them I believe that there will be a move to break the barriers of protection between the blocs and a move towards global free trade which will cause global efficiency and a raise in the worlds living standards. ...read more.

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