Trade agreements
As trade has grown and economies have become more integrated, countries have in recent
years moved to form agreements and trading alliances to ensure that they are in the best position to gain from growing trade opportunities and also to avoid being excluded from emerging trading blocs. Trade agreements can be bilateral (involving two countries), multilateral (and occur on a regional basis), or global. They can promote free trade exclusively amongst members or can be open to all nations. A trading bloc occurs when a number of countries join together in a formal preferential trading arrangement to the exclusion of other countries, such as the European Union (EU) and the North American Free Trade Agreement (NAFTA). Free trade agreements (or preferential trade agreements) are formal agreements between countries designed to break down barriers to trade between those nations. When the agreement is between two countries it is said to be bilateral and when the agreement is between three or more economies it is said to be multilateral or regional. While these agreements are generally described as free trade agreements, it is often more accurate to call them preferential trade agreements because in effect they give more favourable access to goods and services from one nation or a group of nations compared to another. "Trade Blocs" by mjmfoodie (http://youtu.be/YDUq0DINhYk) |
KEY termsTrade bloc occurs when
a number of countries join together in a formal preferential trading agreement to the exclusion of other countries. |