Thursday, May 16, 2013

Types of Trade agreements

PTA
  1. Preferential trade agreements
  2. lower customs duty on the products originating from the member countries.
FTA
  1. Free Trade Agreements
  2. It is a special case of PTA where all tariff and non-tariff barriers are abolished
  3. free access is allowed to the products of member countries.
  4. Example NAFTA (among Mexico, US and Canada).
Customs Union
  1. A Customs Union moves beyond a free trade area by establishing a common external tariff on all trade between, members and non-members.
  2. Customs Unions typically contain mechanisms to redistribute tariff revenue among members
  3. Example: Mercosur
Common Market
  1. free flow labour, capital, and output (goods/services) among the members.
  2. Example, SICA (in Central America)
Economic union
  1. members share a common currency and macro-economic policies (Example European Union).
  2. Example, European Union.

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