large free trade zone or near-free trade zone

Definition formed by one or more tax, tariff and trade agreements

Free Trade Areas

Common Market
Types Customs Union
Economic Union

a. countries should specialize in producing goods in which

opportunity cost of production

a lower
they have than other nations
That is, a comparative advantage

By specializing in the production of these goods

as a whole
b. a group of
nations produce and consume
Trade can
a greater quantity of each product
Blocks
more specialized
As countries become
in the production of goods

c. it becomes necessary to trade with countries

Need for
Trade need these goods
Blocks that
have resources unavailable in that nation

As nations become more specialized

d. increasingly dependent
they also become
on their trading partners

with fewer resources and land

Since smaller
countries less powerful
are generally
than larger nations
e.
to develop economic alliances
the need arises
to gain buying and selling power
f. Hence, trading blocs arise
Trade Blocks.mmap - 18/04/2009 - Carlos Mondragón