Trading Blocs- The European Union (1 Viewer)
- Thread starter Bimbo
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Bambul
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I forget the name for it, but the EU is a "protective" trading bloc. Protection between countries within the bloc are reduced (in the EU's case I think they were eliminated), but put up, if you will, "around" the trading bloc. What you get is increased trade within the countries that are part of the bloc and decreased trade with the rest of the world.
The other type of trading block is something like APEC. Here the countries aim to reduce trade protection for all other countries, not just those within the trading bloc. This eliminates an inefficient allocation of reasources from countries trading with other countries with which they have little protection rather than those which can produce more efficiently. This is actually one argument against the FTA with the US, that it will lead to Australia diverting trade away from Asia and towards the US and the result for Australia will actually be worse than if it did nothing.
The other type of trading block is something like APEC. Here the countries aim to reduce trade protection for all other countries, not just those within the trading bloc. This eliminates an inefficient allocation of reasources from countries trading with other countries with which they have little protection rather than those which can produce more efficiently. This is actually one argument against the FTA with the US, that it will lead to Australia diverting trade away from Asia and towards the US and the result for Australia will actually be worse than if it did nothing.
Yeah, that ^ but we call it closed. The EU is interesting though, they are almost moving beyond trading bloc, since they have a central currency and a central reserve bank. It helps countries in the EU trade with each other, but actively discorages outside trade with really high tariffs.
This works against the WTO objective of free world trade, since other countries are subjected to such high tariffs, and because it has promoted retaliation trade blocs such as NAFTA which are also closed (though it doesnt have such agressively high tariffs as the EU) and thus the world is more being split up into regions which trade mostly with each other. (I think 65+% of trade by EU members is with other EU members, which is compartively very high). Splitting up into regions could have very negative effects on other countries too (example here - huge loss of trade for Australia when England joined EU and upped tariffs) especially 3rd world countries.
This works against the WTO objective of free world trade, since other countries are subjected to such high tariffs, and because it has promoted retaliation trade blocs such as NAFTA which are also closed (though it doesnt have such agressively high tariffs as the EU) and thus the world is more being split up into regions which trade mostly with each other. (I think 65+% of trade by EU members is with other EU members, which is compartively very high). Splitting up into regions could have very negative effects on other countries too (example here - huge loss of trade for Australia when England joined EU and upped tariffs) especially 3rd world countries.
Eu has a that cap fingy or is ie eep? sumfing
you know the farming fingy u got pay for what you produce not for what you sell
i fink (could be rong soo dun take my word for it) eu reduce barriers between members but increase the barriers if your a non-member (take the recent trend in aussie we harder having england as a big trading partner)
you know the farming fingy u got pay for what you produce not for what you sell
i fink (could be rong soo dun take my word for it) eu reduce barriers between members but increase the barriers if your a non-member (take the recent trend in aussie we harder having england as a big trading partner)
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Bambul
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Common Agricultural Policy (CAP). France, Ireland and SPain support it whilst England and Germany are against it. It essentially regulates what you can produce (production quotas and non-production regulations) and then offers you a fixed (subsidised) price per unit of the good you produce.
It distorts the true values of supply and demand and causes surplus agricultural produce to be produced at prices lower than that of underlying market equilibrium. Since this is above the level of demand in Europe, surpls produce is often sold to African nations who cannot compete and where agriculture comprises a very significant part of their economies.
As you may be able to tell, I'm against the CAP.
It distorts the true values of supply and demand and causes surplus agricultural produce to be produced at prices lower than that of underlying market equilibrium. Since this is above the level of demand in Europe, surpls produce is often sold to African nations who cannot compete and where agriculture comprises a very significant part of their economies.
As you may be able to tell, I'm against the CAP.