Chapter 3 - Chapter 3 Forms of economic integration o...

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Chapter 3 Forms of economic integration o Preferential Trade Agreement (PTA): A preferential trade agreement is perhaps the weakest form of economic integration. In a PTA countries would offer tariff reductions, though perhaps not eliminations, to a set of partner countries in some product categories. Higher tariffs, perhaps non-discriminatory tariffs, would remain in all remaining product categories. Many countries seek to lower barriers to trade within their regions. PTAs give partners special treatment and may discriminate against others o Free Trade Area (FTA): A free trade area occurs when a group of countries agree to eliminate tariffs between themselves, but maintain their own external tariff on imports from the rest of the world. The North American Free Trade Area is an example of a FTA. o Customs Union : A customs union occurs when a group of countries agree to eliminate tariffs between themselves and set a common external tariff on imports from the rest of the world. The EU and Turkey, the Andean Community, Mercosur, CARICOM, Central American Integration System (SICA) o Common Market: A common market establishes free trade in goods and services sets common external tariffs among members and also allows for the free mobility of capital and labor across countries. The European Union was established as a common market by the Treaty of Rome in 1957, although it took a long time for the transition to take place. Today, EU citizens have a common passport, can work in any EU member country and can invest throughout the union without restriction. o
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Chapter 3 - Chapter 3 Forms of economic integration o...

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