Advantages And Disadvantages Of Trade Blocs

Some Major benefits of international trade include the reduction of poverty, expansion of business opportunities for local companies and reduces costs for consumer.

Reduced trading costs with cooperation countries, better communication through trade, larger competition for similar companies, more choices for consumers, and a greater sense of global community.

A regional trade agreement is “where member nations agree to impose lower barriers to trade within the group than trade with nonmember nations,” (Carbaugh, p 529). Regional trade agreements don’t affect each nations domestic policies, it only creates increased trade and relations among certain nations. This type of trading system complements

Economic integration would open foreign markets for local manufacturers and producers. This would increase their business opportunities and give them access to bigger demand, which in turn would encourage them to build their capacity and increase their efficiency.

Most economies are open, which means interactions in trade and finance with other countries. Trade is buying and selling products or services. If an individual or country has an absolute advantage over another, this is the ability to produce more of a good or service using the same number of resources available. If an individual or country has a comparative advantage over another, this is the ability to produce a good or service at a lower cost than others. Possessing a comparative advantage in trade is very important because, an individual or country can produce a product or service and make more money on that item or service. The individual or country can than import other items the individual or country does not have or does not make as much profit on. Maximizing profits is most important for an individual or country, and trading to obtain other items is good business.

Economic Union - occurs when countries enter into an economic agreement to remove barriers to trade and adopt common economic policies. European Union or simply known as the EU is an example of economic union.

So by trading with each other, both countries are able to push out their consumption frontiers. The aggregate consumption of both goods can increase.

In today's globalized economies, virtually every country in the world belongs to some form of regional integrated trade organization whether by direct membership, bilateral or multilateral agreement. Regional integration is a process by which sovereign states in a particular region enter into an agreement to promote economic growth through the reduction of barriers to trade restrictions and safeguard common interests such as the environment. The removal of trade barriers results in a free trade zone thus creating a single market. Sovereign nations have many differences, some may be more economically sound and others may have a greater labor force or better technology. In the end,

Economic analysts say trading among other countries with no stipulations improve global efficiency in resource allocation (Tupy, 2005). Free Trade delivers goods and services to those who value them most and allows partners to gain from specializing in the producing those goods and services they do best; according to Tupy’s findings, Economists call that the law of comparative advantage. Tupy also states when producers create goods they are comparatively skilled at i.e. Germans producing beer and the French producing wine, those goods increase in abundance and quality. Trade allows consumers to benefit from more efficient production methods, for example, without large markets for goods and services, large production runs would not be economical. Large production runs, in turn, are instrumental to reducing product costs while lower production

United States of America, Mexico and Canada built the trading bloc which is known as North American Free Trade agreement and removed the trade barrier and tariff between in order to accelerate their economy. Three governments aimed to utilize each countries competitive advantage like labor from Mexico, natural resources from Canada and financial resources and technologies from USA. In brief, the agreement include market access for goods, protection for foreign direct investment, protection for intellectual property, rules of origin and commitment to the

- Trading blocks such as the North American Free Trade Agreement and the European Union stand to have a great impact on international business because they change the rules of trade and in some cases, investment, presenting new opportunities but also new threats to both foreign and domestic companies. Whether they are harmful or helpful is difficult to state in just a paragraph or two, but will depend on the

Globalization builds good relationship between countries as they exchange products. Trade agreements like NAFTA, WTO, EU and ASEAN etc. are done to make the tie stronger and for the ease of trading with each other. It helps to avoid conflicts among countries, promotes understanding and goodwill.

Trade allows countries to use their resources more cost-effectively through gaining expertise. It allows countries to become more productive and able to gain high a standard of living and will keeping the cost of everyday products minimal. Without International Trade, most nations would be unable to feed, clothe, etc. Even countries which are rich in resources would also suffer immensely without trade. Some types of products would become unavailable, or

Not only that, since trade between countries occur freely, customers have chance to buy goods from other countries. The choices they have also increases and varies. Not only that, customer can also compare the prices of things they want to buy between countries. In example, a person from Malaysia wants to buy a leather coat. So he find out that the coat he wants is available in Australia and England. Therefore, he now can compare the prices and choose the one with a more reasonable price. This seems to be small if be viewed on one person buying things but if we see it in a view point of a company buying products in loads such as a chocolate factory in Malaysia that is looking for the best cocoa to make their chocolates found that cocoa is cheaper in Nigeria than any other states, therefore the company can find their cocoa supplies from

Many economists today argue that the fewer tariffs and barriers there are to foreign trade, the better everyone fares. That view underlies the agreements that the United States and 152 other countries have made as members of the World Trade Organization (WTO). Among other