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State the differences between free trade areas, customs unions and common markets.

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A free trade area exists when there is no restriction on the movement of goods and services
between countries. This may be extended into a customs union when there is a free trade area
between all member countries of the union, and in addition there are common external tariffs
applying to imports from non-member countries into any part of the union. In other words,
the union promotes free trade among its members but acts as a protectionist bloc against the
rest of the world.
A common market encompasses the idea of a customs union but has a number of additional
features. In addition to free trade among member countries there is also complete mobility of
the factors of production. A British citizen has the freedom to work in any other country of
the European Community, for example. A common market will also aim to achieve stronger
links between member countries, for example by harmonizing government economic policies
and by establishing a closer political confederation.

Kavungya answered the question on April 15, 2021 at 07:46

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