Final answer:
A trade agreement that eliminates trade barriers among members, establishes common barriers with non-members, and allows free movement of production factors is a Common Market. It's more integrated than a Free Trade Area and differs from an Economic Union, which includes policy coordination.
Step-by-step explanation:
The type of trade agreement described in the student's question, where trade barriers among participating nations are eliminated, common barriers to trade with non-member countries are established, and free movement of factors of production is allowed between member countries, is known as a Common Market. This goes beyond a Free Trade Area, which allows free trade between its members but permits each country to have its own external trade policies. A Customs Union would involve a common external trade policy but would not necessarily include the free movement of factors of production. The highest level of economic integration is an Economic Union, which combines the features of a common market with coordinated fiscal and monetary policies amongst its members. Regional Trading Agreements like the European Union offer examples of this evolution, where economies integrate in stages from a free trade association to a common market, and possibly to a full economic union with a common external trade policy and harmonized economic policies.