Trade Bloc

Trade Blocs
FPPT.com
Trade blocs
• Trade blocs are agreements formed by a group of

nations who join forces to boost trade. This might
include reducing trade obstacles, maintaining a
unified currency, or raising taxes on items purchased
from outside the trade bloc.
Trade Bloc
• Depending on the level of the agreement, the goal of

the bloc creation is to boost the flow of commodities,
services, capital, and labor. This, in turn, boosts
member countries' economic strength, stimulates
economic growth, and promotes more effective
resource distribution.
Advantages of Trade Bloc
• Lower prices and more varied products. Tariff elimination leads to
lower prices for consumers in member countries. Free flow also
increases access to a wider variety of goods.
• Companies can increase their sales to other member countries
without worrying about protection.
• Under common market and union economies, capital is free to
flow, encouraging companies to increase investment and create
jobs in some member countries.
• Increased trade allows for increased specialization.
Advantages of Trade Bloc
• Goods and services flow freely and create greater choices for
consumers. It increases competition in the market and forces firms
to increase innovation and efficiency to stay competitive.
• Minimize the potential for conflict among members.
• Increase economic power.
• Offers new opportunities for trade and investment.
• Growth in member countries also tends to extend to other
members. Economic expansion in one member country increases
demand in other members.
Disadvantages of Trade Blocs
• Shutting down the domestic industry. Increased competition creates winners
and losers. If domestic industries are uncompetitive, they exit the market,
increasing unemployment. The danger is even greater if many industries are
uncompetitive, and they absorb a significant workforce.
• Increased economic dependence. Economic performance between member
countries is interconnected. The economic crisis in one member spreads to
other member countries. The impact is even broader due to the significant size
of the trade bloc’s economy. Examples include the debt crises in Greece, Italy,
and Spain, which required the European Central Bank to intervene to handle it.
The intervention was to prevent the impact of the crisis from spreading to other
member countries.
Disadvantages of Trade Blocs
• Loss of state sovereignty. The trade bloc makes decisions for all
members. It may conflict with the domestic economic interests of some
member states. Also, the decisions may favor member countries with a
more significant size of the economy.
• Bring up the trade diversion. The trade bloc distorts the benefits of world
trade. The inefficient firms within the bloc can still survive and are
protected from competition from more efficient firms outside the bloc.
• Retaliation from non-member countries. To protect their economies,
they are likely to form new trade blocs to defend their positions.
CARICOM
• January 23, 2006 the Caribbean
Community (CARICOM) becomes the
newest trade bloc, joining the
approximately 194 other trade blocs in the
fight to ensure market survival
What type of trade bloc is CARICOM?
• The Caribbean Community and Common Market

(CARICOM) is a regional group of nations that
encourage common policy and economic goals
What is the role of CARICOM in trade?
• CARICOM's main purposes are to promote economic

integration and cooperation among its members, to
ensure that the benefits of integration are equitably
shared, and to coordinate foreign policy.
What is the meaning of CSME?
• The Caribbean Single Market and Economy (CSME) is

an initiative of the Caribbean Community and
Common Market (CARICOM) that would integrate
member-states into a single economic unit. The end
result would be the free movement of capital,
services, technology and skilled professionals within
the region.
What is the main purpose of the CSME?
• The main objectives of the CSME are: full use of

labour; full exploitation of the other factors of
production, competitive production leading to
greater variety, quality and quantity of goods and
services, thereby providing greater capacity to trade
with other countries.
What is the difference between Caricom and CSME?
• CSME stands for CARICOM Single Market & Economy.

The CSME Unit of the CARICOM Secretariat is the
implementation office which assists the Member
States in fulfilling the requirements of the Revised
Treaty of Chaguaramas.
Caribbean Forum (CARIFORUM)
• The Caribbean Forum (CARIFORUM) is a subgroup of

the Organisation of African, Caribbean and Pacific
States and serves as a base for economic dialogue
with the European Union.
What did the Caribbean trade with Europe?
• The main products into the continental markets

include alumina, petroleum products, and rum. Much
will depend on the future state of alumina and
petroleum production and markets. Trade in services
with the EU is mainly based on tourism

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Trade Blocs

• Trade blocs are agreements formed by a group of

• Depending on the level of the agreement, the goal of

• The Caribbean Community and Common Market

• CARICOM's main purposes are to promote economic

• The Caribbean Single Market and Economy (CSME) is

• The main objectives of the CSME are: full use of

• CSME stands for CARICOM Single Market & Economy.

• The Caribbean Forum (CARIFORUM) is a subgroup of

• The main products into the continental markets

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