Question

There are five different levels of regional trade agreements – demonstrate how each of these can work in practice. 600 words please with references

Answer 1

Regional trade agreements are agreements between two or more nations which are geographically close to each other for promoting trade as well as economic relations.There are 5 different levels of economic integration between countries.They are Preferential trade areas ,free trade area , common market, customs union, economic union.

The preferential trade agreement needs lowest level of agreement to reduce trade barriers but the member countries do not remove trade barriers.among themselves completely.Member countries do not share common external trade barriers.

In a free trade agreement,member countries remove all trade barriers among themselves and there is free movement of goods and services among member countries.Trade policies of member countries hold good for non member countries as well.

Member countries belonging to customs union eliminate all trade barriers between members and take a common external trade barrier.

In a common market trading agreement , internal trade barriers are removed by the members and common policies are taken when it comes to deal with non members.Resources are allowed to move freely among members.

Economic union is a trading agreement where trade barriers among themselves are removed by members, a common external barrier is taken,free export and import of resources are permitted, common economic policies are taken and there is only one currency which is adopted.