Types of Economic Agreements Between Countries

Questions and Answers

Economic union

Taxation, monetary policy, and social programs

Common market - Allowing shop employees to move freely between stores

Harmonization in economic policies beyond just removing barriers Signup and view all the answers

European Union (EU) Signup and view all the answers

Becoming one giant store with unified management system Signup and view all the answers

PTAs only give preferential treatment to certain products, while FTAs cover a wider range of goods and services. Signup and view all the answers

FTAs have a common external trade policy, while Customs Unions do not. Signup and view all the answers

Common Markets allow for the free movement of labor and capital between member countries. Signup and view all the answers

Reduced tariffs and quotas Signup and view all the answers

Preferential treatment only for certain products Signup and view all the answers

Common external trade policy Signup and view all the answers

Study Notes

Economic Union is the most advanced form of economic integration, including harmonization in economic policies like taxation, monetary policy, and social programs.
European Union (EU) is the prime example of an economic union.

Preferential Trade Agreement (PTA) is like a group of shops offering occasional discounts to each other's customers on specific items.
Free Trade Agreement (FTA) is like a shopping mall where all the shops remove barriers between them and allow customers to move freely.
Customs Union is like the mall agreeing on common closing hours and security measures for all the shops.
Common Market is like the mall allowing shop employees to freely move between stores.
Economic Union is like the mall becoming one giant store with a unified management system for pricing, staffing, and overall operations.

Loosest form of economic agreement where member countries agree to give certain products from other member countries preferential treatment.
No common external trade policies, and restrictions might remain on many goods and services.

Builds on an FTA, eliminating internal trade barriers and agreeing to a common external trade policy.
Sets the same tariffs and quotas for goods coming from non-member countries.
Example: Southern African Development Community (SADC).

Takes things a step further than a customs union.
Allows for the free movement of factors of production like labor and capital between member countries.
Historical example: European Common Market (precursor to the EU).