Trade Agreements & Access to Markets (AQA A Level Geography)

Revision Note

Test yourself Flashcards

Written by: Rhiannon Molyneux

Reviewed by: Bridgette Barrett

Major Trade Blocs

Trade blocs provide members with greater access to a larger market by reducing barriers to trade between member nations
Members of trade blocs can trade and develop more easily because they can sell larger volumes of goods without needing to pay tariffs to access the market
Trade blocs that are made up largely of HDE countries like the EU have lots of wealthy consumers which leads to increased sales
However, trade blocs retain common barriers to trade (such as tariffs) for countries outside of the bloc, reducing their access to the market
LDE countries may struggle to access these large and wealthy markets because they cannot afford to pay high tariffs
Examples of major trade blocs include the EU, the USMCA and ASEAN

Trade Organisations

World Trade Organisation (WTO)

The WTO was set up to:
- Increase the volume of international trade by promoting free trade
- Help to resolve trade disputes between member nations
It encourages member nations to reduce barriers to trade by removing tariffs and quotas
Its goal is to accelerate economic growth and development and to improve standards of living
It has over 160 member nations and accounts for 98% of global trade
The WTO creates Special and Differential Treatment (SDT) agreements these:
- Help LDE countries achieve economic growth by giving them greater market access
An example of an SDT is the EU’s Everything But Arms (EBA) initiative which allows least developed countries to export all products (except weapons) to the EU without any tariffs or quotas
SDTs have been criticised for allowing cheap imports into HDE countries which could undermine local businesses

Membership of the EU

The EU is one of the world’s largest trading blocs
The EU was set up in the 1950s to increase trade and economic growth in the 6 member nations
- Creating greater interdependence
- Reducing chances of conflict
It has expanded over time, reaching a peak of 28 members before the UK left the bloc in 2020 (Brexit)
The EU increases socio-economic and political integration in several ways:
- The Schengen area consists of 23 European countries that have removed border controls allowing people and goods to move freely between countries
- Free movement of people has allowed more than 13 million people with citizenship from one EU country to live in another EU country
- The Euro is the EU’s single currency which has been adopted by 20 member states making it easier and quicker to trade

Brexit

After a referendum in 2016, the UK voted to leave the EU - a vote of 52% (leave) to 48% (remain)
The UK formally left the EU on 31st December 2020
There were many arguments for and against leaving the EU

Arguments For and Against the UK Leaving the EU

For	Against
Control over trade agreements with other countries - the UK has signed a range of trade agreements including with New Zealand, Iceland, Norway and Japan Greater control over immigration - free movement of EU nationals would stop Freedom from EU policies and laws 'regaining sovereignty'	The EU was the UK's largest trading partner (over 40% of exports and over 50% of imports) Free movement of citizens to other EU countries Loss of subsidies for agriculture Loss of workers has particularly impacted agriculture (seasonal workers pick fruit/vegetables) and the hospitality and care sectors Loss of EU funding

Differential Access to Markets

Impacts of Differential Access to Markets

Economic impact	Social impacts
Limited access to markets reduces the ability of a country to achieve economic growth	Limited access to markets results in lower incomes and poorer standards of living for citizens
Tariffs are often placed on secondary commodities rather than primary commodities so LDE countries are forced to sell lower-value primary commodities to avoid tariffs	Countries with limited access to markets have less money to invest in education and healthcare, which reduces future development
Access to a trade bloc increases the potential for trade for example joining the EU in 2007 increased Bulgaria's potential for trade with other member states Leaving a trade bloc as the UK did in 2020 means that trade deals have to be negotiated with other countries individually this may lead to poorer trade deals	Membership of a trading bloc can increase the availability of jobs which improves income and standard of living
Recession in one country can impact the economy of other countries in the trade bloc	Deindustrialisation caused by cheaper goods being imported can lead to the decline of industrial areas

Worked Example

Explain how differential access to markets can impact the economic well-being

[4 marks]

Remember, this answer is a point marked with 1 mark for each valid point made with extra marks for developed points (d)
The command word is ‘explain’
The focus of the question is ‘differential access to markets
You will gain marks for explaining what differential access means and how it affects economic well-being
Be careful to avoid making opposite points e.g. ‘being in a trade bloc makes it easier to trade’ and ‘not being in a trade bloc makes trade difficult’
For full marks, you must make sure that you link to the economic well-being

Answer:

Being in a trading bloc increases the potential for trade (1), for example, USMCA / NAFTA means that trade is enabled between Mexico and the US (1d). This improves the economic well-being of Mexico where thousands of jobs are generated in the car industry (1).
However, being in a trading bloc can also have negative impacts such as a dependence on the economy of countries in the trading bloc (1). For example, Mexico suffered economically due to the recession in the US in 2008 (1) due to its reliance on exports to the US (1d).
Some countries do not have access to trading blocs which limits trade (1) For example, Ukraine does not have access to the single market of the EU and has to negotiate its own deal (1). This means Ukrainians are not free to move to the EU to earn higher wages reducing economic well-being (1d).
Trade agreements can be seen as being unfair (1). Developing countries don’t have access to the rich markets of the EU (1d). This results in them finding it harder to trade and subsequently develop (1d).
The WTO has sought to ensure that developing countries all have preferential access to developed trade markets (1). This provision is called Special and Differential Treatment (SDT) (1d). The aim of this is to promote faster income and growth (1d).
Examples of trade preference schemes include the EU's ‘Everything but Arms’ (1d) accepts goods from the least developed countries on an import tax-reduced, quota-free basis (1d).
However, some people criticise preferential trade agreements as they can cause cheap imports to flood (1). This can result in deindustrialisation in developed countries and higher unemployment (1d).

Last updated: 4 October 2024

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