What you’ll learn9 learning objectivesChoose one objective for a focused lesson, or study the complete topic.4.4.1Preferential trade agreements• Preferential trade agreements can be bilateral, regional, or multilateral• The World Trade Organization is the key multilateral trade institutionSyllabus objective4.4.2Trading blocs• Trading blocs include free trade areas, customs unions, and common markets• They increase integration between member economiesSyllabus objective4.4.3Advantages of trading blocs• Advantages include wider market access, economies of scale, labour mobility, stronger bargaining power, political stability, and cooperationSyllabus objective4.4.4Disadvantages of trading blocs• Disadvantages include loss of sovereignty and challenges to multilateral trade negotiationsSyllabus objective4.4.5Monetary union• Monetary union is a deeper form of economic integrationSyllabus objective4.4.6World Trade Organization• The WTO has objectives and functions linked to trade rules and negotiations• WTO influence is affected by difficulty reaching agreement on services and primary products• Unequal bargaining power between members affects WTO influenceSyllabus objective4.4.7(HL)—Trade creation• Trade creation is an advantage of trading blocs• Trade creation can improve resource allocation within a blocSyllabus objective4.4.8(HL)—Trade diversion• Trade diversion is a disadvantage of trading blocs• Trade diversion can shift purchases away from more efficient non-member producersSyllabus objective4.4.9(HL)—Monetary union evaluation• Evaluate advantages and disadvantages of monetary unionSyllabus objective
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