![]() ![]() The counter-argument is that the benefits of trading blocs for member nations are too good to pass up. Critics of blocs say free trade should be a worldwide thing, and favoring specific countries distorts the natural flow of goods around the world. Modern trading blocs don't wage war on non-members like the Hanseatic League, but they're still controversial. The EU and the United States have different regulations and laws on many of these issues, forcing businesses to adapt to two sets of standards. Non-tariff barriers can include regulations on safety, health, food, monopoly power and intellectual property rights. The euro, for example, has replaced national currencies in 19 EU states. Common-market members try to harmonize their economic policies, industrial policies and regulations until they operate almost like a single economy. Members of a common market such as the European Union drop all trade barriers, including non-tariff ones.A customs union combines free trade between members with tariff barriers against nations outside the union.A free trade area such as NAFTA eliminates or reduces trade barriers on all goods.Preferential trade areas agree to reduce or eliminate tariffs on selected goods traded between countries.That gives nations an incentive to form various trade blocs such as the European Union (EU) or the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico. The League's power vanished in the 17th century, though it didn't disband until 1862.Īfter World War II, tariffs declined around the world, but they didn't disappear completely. Other nations began closing their borders to Hanseatic trade to protect their own merchants and protest the League's military interventions. That kind of power inevitably attracted opposition. In the 14th century, the League fought a nine-year war with Denmark to win trading privileges in Scandinavia. Violence was a constant threat to long-distance trade one of the advantages of trade blocs was that the merchants' private armies helped protect each other. Unlike modern trading blocs, the Hanseatic League was a powerful military force. Along with members offering each other freer trade, the League's combined economic power enabled it to secure favorable trading privileges in other parts of Europe. The Hanseatic League was one of the first European examples, a trade federation of German towns and cities that formed sometime prior to 1241 C.E. Trading blocs go back before the name was coined.
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