Trading blocs and the World Trade Organization Edexcel International GCSE Economics revision
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In plain words
Countries often agree to drop trade barriers among themselves while keeping them against everyone else. A group like this is a trading bloc. The European Union is the best-known.
Above the blocs sits the World Trade Organization, which sets the rules that member countries trade by.
5 things to know
- A trading bloc is a group of countries that agree to reduce or remove trade barriers between them. Examples are the European Union (EU) and the Association of Southeast Asian Nations (ASEAN).
- For members: a larger market, more trade, more competition, lower prices and more investment. But home firms face more competition, and members give up some control over their own trade policy.
- For non-members: their exports to the bloc still face barriers, so they find it harder to compete with firms inside it.
- The World Trade Organization (WTO) promotes free trade: it sets the rules of international trade, organises talks to reduce barriers, and settles trade disputes between member countries.
- Trade patterns: developed countries mainly export manufactured goods and services, and trade mostly with one another. Developing countries have relied more on exporting primary products, though many now export manufactured goods.
Tips and tricks
- A trading bloc means free trade inside it and barriers around it. So the effect depends on which side of the wall a country is on.
- The WTO does not trade. It is a referee: it makes the rules and rules on disputes.
It lands in your notebook with its questions as flashcards.
Trading blocs and the World Trade Organization: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
A trading bloc is
Members trade more freely with each other.
Which is an advantage of a trading bloc for firms in member countries?
They can sell across the whole bloc without barriers.
How may a trading bloc affect a country that is not a member?
Its goods are at a disadvantage compared with members' goods.
What is the main role of the World Trade Organization?
It sets and enforces the rules of world trade.
Which is typical of the exports of many developing countries?
Many still rely on crops, minerals and other raw materials.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 7 marks. Write your answers on paper, then check them.
Trading blocs and the World Trade Organization
Edexcel International GCSE Economics 4EC1 · 7 marks · papermunch.org
Name ______________________________ Date ______________
Define a trading bloc.[2]
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A group of countries that agree to reduce or remove barriers to trade between themselves.
Explain one advantage to a firm of its country joining a trading bloc.[3]
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It can sell to customers in all the member countries without tariffs, so it has a much larger market, can produce more, and can gain economies of scale.
State two functions of the World Trade Organization.[2]
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Any two of: setting the rules of international trade, organising negotiations to reduce trade barriers, settling trade disputes between countries.
Answers: Trading blocs and the World Trade Organization
- 1. A group of countries that agree to reduce or remove barriers to trade between themselves.
- 2. It can sell to customers in all the member countries without tariffs, so it has a much larger market, can produce more, and can gain economies of scale.
- 3. Any two of: setting the rules of international trade, organising negotiations to reduce trade barriers, settling trade disputes between countries.