Question

In: Economics

Giving an example of each, what are the differences between a Free Trade Area, Customs Union,...

Giving an example of each, what are the differences between a Free Trade Area, Customs Union, Common Market and Economic Union? Explain clearly. be as clear and specific as possible

Solutions

Expert Solution

(1) Free Trade Area -

Free Trade Area or FTA is generally considered that group of countries where there are not tariff, import quotas and non tariff barriers and this group allow to free movement of goods and services among group countries.

These countries have their own trade policy towards non member countries.

Examples -

The examples of free trade area are -

EFTA - (European Free Trade Association) having Norway, Iceland, Switzerland and Liechtenstein.

NAFTA - (North American Free Trade Agreement) having USA, Mexico, Canada,

SAFTA - (South Asia Free Trade Area) comprising India, Afghanistan, Bhutan, Bangladesh, Maldives, Nepal, Pakistan and Sri Lanka.

(2) Customs Union -

This is group of countries in which there is no imposition of tariff on import and agree to impose common external tariffs on goods and services on outside custom Union countries.

But the difference between Free Trade Association and Custom Union that in Custom Union participating countries set a common custom tariff i.e. A Single External Tariffs against outsider countries but in FTA there is not like that.

Examples -

EU - European Union

Custom and Monetary Union

Economic and Monetary Union

(3) Common Market -

Common Market refers to those market where there is free movement of resource such as labour, capital etc. among its member countries.

They are generally eliminate iternal trade barriers and follow common external trade barriers.

Examples -

Southern Cone Market

East African Common Market

West African Common Market

(4) Economic Union -

Economic Union means an agreement between countries or nations to allow free mobilization of goods and services, capital, labour or any other resources.

This is a kind of open market in which there is no barriers among nation countries. And these countries are increasing economic efficiency.

The best example of Economic Union is EU i.e. European Union.


Related Solutions

Economics 1 What are the differences between a free trade area, customs union, common market, and...
Economics 1 What are the differences between a free trade area, customs union, common market, and economic union? Do any RTAs fit completely within one of these models of integration? 2 In what ways is the EU a unique RTA? What are some of the problems confronting the EU today?
The difference between a free trade area and a customs union is, in brief, that the...
The difference between a free trade area and a customs union is, in brief, that the first is politically straightforward but an administrative headache, while the second is just the opposite. Consider first the case of a customs union. Once such a union is established, tariff administration is relatively easy: Goods must pay tariffs when they cross the border of the union, but from then on can be shipped freely between countries. A cargo that is unloaded at Marseilles or...
a. Trade agreements i. How does a customs union differ from a free-trade area? Provide an...
a. Trade agreements i. How does a customs union differ from a free-trade area? Provide an example of each. ii. Why do some economists argue in favour of multilateral trade agreements over regional trade agreements? b. What are the likely implications of Brexit after the end of the transition period for international trade between the UK and the EU? Explain.
a) Explain a Customs Union. (2 pts) b) Why does creating a Customs Union create trade...
a) Explain a Customs Union. (2 pts) b) Why does creating a Customs Union create trade and benefit a country? Use a graph in your explanation. (3 pts) c) Now assume that a small country (A) forms a Customs Union with another country (C), however that country is not the low cost producer, which is a third country (B). Use a graph in your explanation of the “trade diversion” and “trade creation” due to the formation of this Customs Union...
1. Highlight, with examples, the difference between the ‘Customs Union’ and ‘Economic Union’. 2. What is...
1. Highlight, with examples, the difference between the ‘Customs Union’ and ‘Economic Union’. 2. What is countertrade? Explain how switch trading works. 3. Making or buying decisions are of great strategic importance to firms in international trade. What are the advantages and disadvantages of such decisions? 4. What are Incoterms? Why do businesses use Incoterms? Highlight the differences in 2 categories of Incoterms 2010.
The main aspect of the European Union is the realization of a Euro-Mediterranean free trade area,...
The main aspect of the European Union is the realization of a Euro-Mediterranean free trade area, in accordance with the rules of Select one: a. the a and b b. the International Monetary Fund c. the World Trade Organization d. all of the above e. The United Nations F. None of the above g. the European Central Bank h. the World Bank
What is the difference between the EU single market and the EU Customs union?
What is the difference between the EU single market and the EU Customs union?
Define and illustrate a welfare-reducing trade diversion effect of a customs union.
Define and illustrate a welfare-reducing trade diversion effect of a customs union.
most customs unions or free trade agreements are created between countries of close geographical proximity. Why...
most customs unions or free trade agreements are created between countries of close geographical proximity. Why is this case? is this always welfare increasing? why or why not?
What are the differences between common markets, common unions, and free trade agreements? Which of these...
What are the differences between common markets, common unions, and free trade agreements? Which of these are the most comprehensive form of trade agreement.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT