Examine the role of the European Union as a trading bloc.

The European Union is more than just a trade bloc. A trade
bloc is created to make it easier for cross-border trade between members of the trade
bloc. This is done by eliminating tariff and non-tariff restrictions in trade between
member nations but they are free to have different trade relations with other nations
and have different laws regulating production of goods.

The
European union is a customs and monetary union with a common currency. The extra
features of this extended form of a trading bloc are that all the member nations have
common labor laws, laws concerning production of goods, etc. This makes the conditions
under which products are manufactured in all member nations the same and none of them
can be accused of gaining an edge by using unfair practices. An example of which would
be the case within NAFTA with the US accusing Mexico of gaining a competitive advantage
by using low wage rates.

The members of the European Union
also have common trading terms with all nations lying outside the European Union. This
prevents some member nations from benefiting by trading with non-member nations under
different terms than others. An example of this could be a member of a trading bloc
importing certain products at a reduced rate while the others don’t and then exporting
the same to other member nations without incurring any
tariffs.

Most of the members of the European Union have
also adopted a common currency. This eases the monetary transactions involved in trade
as there is no requirement to deal with different exchange rates while trading with
members having different currencies.