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Lecture 5

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Global Management Studies
GMS 200
Tsogbadral Galaabaatar

Week 5,6- Chapter 3 Question 1 At first glance, trading blocs seem like a great idea as they create free trade and have a trade zone with minimal barriers. However, when studying trading blocs in-depth, they actually have many downsides. One of the downsides of trading blocs such as NAFTA and the EU is that they have greatly impacted the global economy. For instance. the EU can trade within themselves, but when it comes to trading with counties that are not part of the bloc, it becomes complicated. Because of this, trading blocs only trade within each other causing there to be a distortion of trade. Another way trading blocs affect the global economy is the loss of benefits. In certain countries products are only made in Europe and some are only made in Canada. this causes benefits and products to be lost causing a country to lose money. Thirdly, "trading blocs often don’t help the process of globalization. For example, the EU’s CAP involved high tariffs on food imports and the dumping of surplus food items onto world markets."(Pettinger 2008) Distortion or trade, loss of benefits, and high tariffs are a few reasons why trading blocs impact the global economy. Question 2
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