trading blocs are groups of countries quizlet

Rather, they say, what is worrisome is the prospect that they could become a substitute for the battered set of rules that is now in place, administered by the Geneva-based General Agreement on Tariffs and Trade, the 108-country compact that governs the world trading system. The real danger, most economists believe, does not lie in these new alliances themselves. “Throwing up new barriers is one thing,” he said, “but bringing down the internal ones is another.”

trade official adds that the kind of free-trade agreements being established in the Americas can hardly be interpreted as an obstacle to world trade. Lawrence, an economist at Harvard University’s Kennedy School of Government. “The major regional initiatives currently under way are more likely to represent the building blocks of an integrated world economy than stumbling blocks which prevent its emergence,” argues Robert Z. Already, the maquiladora program, in which more than 2,400 cross-border manufacturing plants have sprung up along the U.S.-Mexican border, gives a foretaste of the possibilities. Likewise, investors are likely to find Latin America far more attractive if it is hitched to the powerful U.S. Already, German and British banks are looking toward offering their services all through the 12 countries of the European Community. Some analysts argue that European integration could increase output on that continent by as much as another 10%.

“As a result, the potential losses from trade diversion (from other regions) are limited, and the potential gains from trade creation are large.” Krugman, a Massachusetts Institute of Technology economist. In fact, many argue that lowering regional tariffs and quotas will boost trade worldwide by spurring economic growth in areas whose geography already provides natural incentives for commerce.Ĭountries that form blocs would be each others’ main trading partners “even without special arrangements,” writes Paul R. Studies so far show no indication that trade is becoming more regionalized. And with Japanese investment already spreading throughout Asia, there is a growing belief that Tokyo could use its influence to control trade in that region as well.īut leading economists and trade officials say trading blocs are not necessarily a bad development. “We need a strong bloc to countervail others that are forming,” Mahathir says. Besides Malaysia, the ASEAN members are Indonesia, Thailand, Singapore, the Philippines and Brunei. of Southeast Asian Nations within 15 years. Other plans for regional economic alliances are also being examined, such as a proposal to establish a free-trade zone among the Assn. * Asian countries, fearful of being shut out by two big new trading powers, are showing new interest in Malaysian Prime Minister Mahathir Mohamad’s suggestion that the region form its own trading bloc.

Trading blocs are groups of countries quizlet