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Discuss the difference between a Free Trade Area, a Customs Union, a Common Market and an...

Discuss the difference between a Free Trade Area, a Customs Union, a Common Market and an Economic and Monetary Union. Provide at least one real-world example for each.
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SOLUTION :-

  • Free trade area is when countries agree to remove all tariffs against each other. Example NAFTA
  • Customs union involves free trade agreement as well as common tariff against non-member nations. Example MERCOSUR
  • Economic union involves free movement of factors of production (labour and capital) along with the features of Customs Union. Example: African Union
  • Monetary union has all the features of an economic union. However, it has addtional feature of common currency. Example, European Union's Economic and Monetary Union.
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