What are regional free trade zones? Explain the advantages and disadvantages of the European Union (EU)

Question

What will be an ideal response?

Answer 1

Certain countries have formed free trade zones or economic communities. These are groups of nations organized to work toward common goals in the regulation of international trade. One such community is the European Union (EU). Formed in 1957, the EU set out to create a single European market by reducing barriers to the free flow of products, services, finances, and labor among member countries and developing policies on trade with nonmember nations. Today, the EU represents one of the world's largest single markets. Currently, it has 28 member countries containing more than half a billion consumers and accounts for almost 16 percent of the world's imports and exports. The EU offers tremendous trade opportunities for U.S. and other non-European firms. Over the past decade and a half, 19 EU member nations have taken a significant step toward unification by adopting the euro as a common currency. Widespread adoption of the euro has decreased much of the currency risk associated with doing business in Europe, making member countries with previously weak currencies more attractive markets. However, the adoption of a common currency has also caused problems as European economic powers such as Germany and France have had to step in recently to prop up weaker economies such as those of Greece, Portugal, and Cyprus. This recent ongoing "euro crisis" has led some analysts to predict the possible break-up of the euro zone as it is now set up.