Question

Explain the four types of regional trading bloc, making sure that the differences between them are clearly stated.

a) PTA: Agreement among countries to reduce tariffs, FTA: Agreement to eliminate all tariffs, Custom Union: Agreement to establish common external tariffs, Common Market: Agreement to allow free movement of goods, services, and people.
b) PTA: Agreement to promote political unity, FTA: Agreement to share natural resources, Custom Union: Agreement to form a single government, Common Market: Agreement to adopt a common currency.
c) PTA: Agreement to reduce taxes, FTA: Agreement to protect domestic industries, Custom Union: Agreement to restrict immigration, Common Market: Agreement to standardize product regulations.
d) PTA: Agreement to control inflation, FTA: Agreement to promote cultural exchange, Custom Union: Agreement to establish a common legal system, Common Market: Agreement to regulate environmental policies.

Answer 1

There are four types of regional trading blocs: Preferential Trade Agreement (PTA), Free Trade Agreement (FTA), Custom Union, and Common Market. Each type has different characteristics and levels of integration.

Step-by-step explanation:

A) There are four types of regional trading blocs:

1. PTA: This stands for Preferential Trade Agreement. It is an agreement among countries to reduce tariffs. Under a PTA, countries agree to give preferential treatment to each other's goods by granting them lower tariffs.
2. FTA: This stands for Free Trade Agreement. It is an agreement to eliminate all tariffs. Countries that enter into an FTA agree to remove all barriers to trade, including tariffs and quotas, for goods traded between them.
3. Custom Union: This is an agreement to establish common external tariffs. Countries in a customs union maintain their own internal trade policies but adopt a common policy towards countries outside the union. This means that all members of the customs union impose the same tariffs on imports from non-member countries.
4. Common Market: This is an agreement to allow free movement of goods, services, and people. In a common market, not only are trade barriers eliminated, but there is also free movement of capital, services, and people between member countries.

Each type of regional trading bloc has its own unique characteristics and level of integration.