Question

List and explain the six types of regional trade arrangements presented in Chapter 8. Briefly explain static and dynamic effects that arise from greater economic integration.

Answer 1

Firstly we should know what is the trade agreement and it's types .

Definition : A trade agreement is a contract or agreement between two or more nations that outlines how they will work together to ensure mutual benefit in the field of trade and investment.

There are some of the type of trade agreement it is following :

1) PTA: preferential trade agreement

This is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tarrif but not by abolished through a trade pact . It is the first stage of economic integration.For example 1. Asia Pacific trade agreement 2. India mercosur preferential trade agreement

2) FTA: free trade agreement

A free trade area is a trade bloc whose member countries have signed a free trade agreement which eliminates tarrifs , import quetos and preferences on most goods and services traded between them

For example:SAPTA OR SAFTA

3) CUSTOMS UNION :

An agreement among countries to have free trade among themselves and to adopt common external barriers against any other country interestin exporting to these countries For example :southern common market mercosur

4) COMMON MARKET:

A type of custom union where there are common policies on product regulation and freedom of movement of goods , services and the factory of production (capital and labour ) and a common external trade policy.

5) ECONOMIC UNION:

An economic union is a type of trade bloc which is composed of a common market with a customs union . The participant countries have both common policies on product regulation freedom of movement of goods.

6)ECONOMY AND MONITORY UNION

When an economic union involves unifying currency and MONITORY one

This is the types of the trade agreement