What is the difference between a trading bloc and a bilateral trading agreement?

A trading bloc and a bilateral trading agreement are two types of economic agreements between countries that aim to promote international trade and economic cooperation.

A trading bloc is a group of countries that form an economic union and agree to remove trade barriers between member countries, while also imposing a common external tariff on non-member countries. Trading blocs aim to increase trade among member countries and promote economic cooperation.

A real-world example of a trading bloc is the European Union (EU), which is a political and economic union of 27 member states located primarily in Europe. The EU has created a single market with the free movement of goods, services, capital, and people among member countries, and has a common external tariff on non-member countries. The EU has also established common policies in several areas, such as agriculture, trade, and environment.

A bilateral trading agreement is an economic agreement between two countries that aims to reduce trade barriers between them, such as tariffs and quotas. Bilateral trading agreements can lead to increased trade between the two countries, and can also promote economic cooperation and investment.

A real-world example of a bilateral trading agreement is the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) in 2020. The USMCA is a free trade agreement between the United States, Mexico, and Canada, and aims to reduce trade barriers between the three countries in several areas, such as agriculture, manufacturing, and intellectual property. The USMCA has provisions that aim to increase regional content requirements in the production of automobiles, which is expected to promote economic cooperation among the member countries.