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Trade bloc facts for kids

Kids Encyclopedia Facts

A trade bloc is like a special club for countries. In this club, countries agree to make it easier to trade with each other. They do this by lowering or getting rid of things that make trade hard, like tariffs (which are taxes on goods coming into a country) or other rules that slow down trade.

These trade clubs can be simple agreements between a few countries, like the USMCA (United States-Mexico-Canada Agreement). Or, they can be part of a bigger group, like the European Union. Depending on how closely countries want to work together, trade blocs can be different types. They can be areas where trade is just a little bit easier, or they can be groups that act almost like one big market.

What Trade Blocs Do

Economic integration
Stages of economic integration around the World (each country colored according to the most integrated agreement that it participates in):      Economic and monetary union (ECCU/XCD, Eurozone/EUR, Switzerland–Liechtenstein/CHF)      Economic union (CSME, EAEU, EU, GCC, Mercosur, SICA)      Common market (EEA–Switzerland)      Customs and monetary union (CEMAC/XAF, UEMOA/XOF)      Customs union (CAN, EAC, EUCU, SACU)      Multilateral free-trade area (AANZFTA, ASEAN, CEFTA, CISFTA, COMESA, CPTPP, EFTA, GAFTA, PAFTA, RCEP, SADCFTA, SAFTA, USMCA)

Trade blocs have been around for a long time! For example, the Hanseatic League was a powerful trade group in Northern Europe from the 1100s to the 1600s. Another example is the German Customs Union, which helped German states trade better in the 1800s.

Many new trade blocs started forming in the 1960s, 1970s, and again in the 1990s. By 1997, more than half of all global trade happened within these regional groups.

Experts say that successful trade blocs often have a few things in common:

  • Countries have similar levels of wealth (measured by GNP).
  • They are geographically close to each other.
  • They have similar or compatible rules for trading.
  • They are committed to working together as a region.

Some people who support global free trade don't like trade blocs. They think these blocs make it easier for countries in the group to trade with each other, but harder for them to trade with countries outside the group. However, other experts believe that trade blocs can actually help the global trading system grow.

Understanding Trade Bloc Terms

It's helpful to know some special words used for trade blocs:

Common Market Explained

A common market is a step where countries in a trade bloc work even more closely together. It's like moving towards becoming one big market.

Single Market Explained

A single market is a type of trade bloc where most trade barriers for goods are gone. It also means that people, money, and services can move freely between the countries. This makes it much easier for businesses to operate across borders.

Trade Bloc Statistics

GDP PPP 2021 Selection
Selection of GDP PPP data (top 10 countries and blocs) in no particular order

This table shows some interesting facts about different trade blocs, including their population and how much money they make (Gross Domestic Product or GDP).

This list is based on the data obtained from Flag of the United Nations.svg Statistics Division.

Trade bloc Population Gross domestic product (USD) Members
2006 2007 growth per capita
Economic and monetary unions
EMU 324,879,195 10,685,946,928,310 12,225,304,229,686 14.41% 37,630
OECS (sovereign states) 593,905 3,752,679,562 3,998,281,731 6.54% 6,732
OII 504,476 12,264,278,329 14,165,953,200 15.51% 28,081
CCCM 6,418,417 39,616,485,623 43,967,600,765 10.98% 6,850
Customs and monetary unions
CEMAC 39,278,645 51,265,460,685 58,519,380,755 14.15% 1,490
UEMOA 90,299,945 50,395,629,494 58,453,871,283 15.99% 647
Customs unions
CAN 96,924,486 281,269,141,372 334,172,968,648 18.81% 3,448
EAC 127,107,838 49,882,030,443 61,345,180,041 22.98% 483
EUCU 574,602,745 15,331,827,900,202 17,679,376,474,719 15.31% 30,768
GCC 36,154,528 724,460,151,595 802,641,302,477 10.79% 22,200
MERCOSUR 271,304,946 1,517,510,000,000 1,886,817,000,000 12.44% 9,757
SACU 58,000,000 1,499,811,549,187 1,848,337,158,281 23.24% 6,885
Preferential trade areas and Free trade areas
AANZFTA-ASEAN+3 2,085,858,841 10,216,029,899,764 11,323,947,181,804 10.84% 5,429
ALADI 499,807,662 2,823,198,095,131 3,292,088,771,480 16.61% 6,587
AFTZ 553,915,405 643,541,709,413 739,927,625,273 14.98% 1,336
APTA 2,714,464,027 4,868,614,302,744 5,828,692,637,764 19.72% 2,147
CARIFORUM-EUCU-OCTs 592,083,950 15,437,771,092,522 17,798,283,524,961 15.29% 30,060
CACM 37,388,063 87,209,524,889 97,718,800,794 12.05% 2,614
CEFTA 27,968,711 110,263,802,023 135,404,501,031 22.80% 4,841
CISFTA 272,897,834 1,271,909,586,018 1,661,429,920,721 30.62% 6,088
DR-CAFTA-US 356,964,477 13,345,469,865,037 14,008,686,684,089 4.97% 39,244
ECOWAS 283,096,250 215,999,071,943 255,784,634,128 18.42% 904
EEA (EU + EFTA) 499,620,521 14,924,076,504,592 17,186,876,431,709 15.16% 34,400
EFTA-SACU 68,199,991 1,021,509,931,918 1,139,385,636,888 11.54% 16,707
EAEC 207,033,990 1,125,634,333,117 1,465,256,182,498 30.17% 7,077
USMCA 449,227,672 15,337,094,304,218 16,189,097,801,318 5.56% 36,038
TPP 25,639,622 401,810,366,865 468,101,167,294 16.50% 18,257
SAARC 1,567,187,373 1,162,684,650,544 1,428,392,756,312 22.85% 911
SPARTECA 35,079,659 918,557,785,031 1,102,745,750,172 20.05% 31,435
Pacific Alliance 218,649,115 1,371,197,216,140 1,525,825,175,045 11.28% 6,978

How Trade Blocs Compare

This table shows how different regional trade blocs work. It highlights if they have free trade, common markets, or even common currencies. It also shows if people can travel freely between member countries.

Activities
Regional bloc Free Trade Area Economic and monetary union Free Travel Political pact Defence pact Other
Customs union Single market Currency union Visa-free Border-less
EU in force in force7 in force2 in force 1 in force in force
(Schengen 1, 7, NPU and CTA 1)
in force in force
(CFSP/ESDP 1)
ESA 1, 7
EFTA in force in force2, 7 in force in force 1, 7 in force 1, 7 ESA 1, 7
CARICOM in force in force in force 1 in force 1 and
proposed common
in force 1 proposed proposed NWFZ
AU ECOWAS in force 1, 3 in force 1 proposed in force 1 and
proposed for 2012 1 and
proposed common
in force 1 proposed proposed in force NWFZ1
ECCAS in force1 African Continental Free Trade Agreement (AfCFTA)1 in force1 proposed in force1 in force in force NWFZ1
EAC in force in force proposed for 2020s proposed for 2024 proposed  ? proposed for 2023 NWFZ1
SADC in force1 in force1 proposed for 2015 de facto in force 1 and proposed common for 2016 proposed NWFZ1
COMESA in force1 proposed for 2010  ? proposed for 2018 NWFZ1
Common in force1 proposed for 2019 proposed for 2023 proposed for 2028 proposed for 2028 NWFZ1
Pacific Alliance in force in force NWFZ
USAN MERCOSUR in force in force proposed for 2015 in force proposed for 2014 NWFZ
CAN in force in force 1 proposed1 in force NWFZ
Common proposed for 2014 4 proposed for not after 2019 proposed for 2019 proposed for 2019 in force proposed for 2019 proposed in force NWFZ
EEU in force in force1 in force Proposed in force in force 1
AL GCC in force in force proposed proposed 1 in force in force
Common in force1 proposed for 2015 proposed for 2020 proposed proposed
ASEAN in force 5 proposed for 2015 proposed 8 in force proposed for 2015 proposed for 2020 NWFZ
CAIS in force1 proposed  ? in force1 in force1 proposed NWFZ
CEFTA in force RCC7
USMCA in force in force 1, 7
SAARC in force 1, 6 proposed proposed in force9
PIF proposed for 20211 NWFZ1

1 not all members participating
2 involving goods, services, telecommunications, transport (full liberalisation of railways from 2012), energy (full liberalisation from 2007)
3 telecommunications, transport and energy - proposed
4 sensitive goods to be covered from 2019
5 least developed members to join from 2012
6 least developed members to join from 2017
7 Additionally some non member states also participate (the European Union, EFTA have overlapping membership and various common initiatives regarding the European integration).
8 Additionally some non member states also participate (ASEAN Plus Three)
9 Limited to "entitled persons" and duration of one year.

See also

Kids robot.svg In Spanish: Bloque comercial para niños

  • Regional integration
  • Continental union

Lists of Trade Blocs

  • List of preferential trade areas
  • Lists of free trade agreements
    • List of bilateral free trade agreements
    • List of multilateral free trade agreements
  • List of customs unions
  • List of common markets
  • List of economic unions
  • List of monetary unions
  • List of customs and monetary unions
  • List of economic and monetary unions

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