Trade Blocs

 I was having a conversation the other day, well, an argunment, about the UK leaving the EU. This bloke said that the UK could trade with other trade blocs and that the EU wasn't even the largest trade bloc.

For a start, the EU is the largest economy in the world. Although growth is projected to be slow, the EU remains the largest economy with a GDP per head of €25,000 for its 440 million consumers. The EU is the world’s largest trader of manufactured goods and services. The EU ranks first in both inbound and outbound international investments. The EU is the top trading partner for 80 countries. By comparison, the US is the top trading partner for a little over 20 countries. The EU is the most open to developing countries. Fuels excluded, the EU imports more from developing countries than the USA, Canada, Japan and China put together.

Secondly, as the map above shows, trade blocs are created by countries that are in close proximity, and the reason for this is that countries trade most with their neighbours - and a doubling of distance halves the trade between countries.

To suggest the UK would be better off trading with a bloc the other side of the planet, in preference to a trade bloc on its doorstep, demonstrates a complete ignorance of the driving forces behind trade blocs and basic trade theory. There are no trade blocs in existence which are not comprised of near neighbours, but scattered economies separated by vast distances.

I suppose the closest any trade bloc came to being widely separate was the Commonwealth, but very little trade took place within it after the Empire was released. There was one, primary beneficiary - the UK through the auspices of Empire.

However, when left with no choice because of an action of self-harm....