Customs Union, Commercial Policy

1. The integration steps.
In general there are several forms of integration, which can be distinguished in integration movements of greater or lesser intensity depending on the purpose: namely free-trade areas, customs unions, single (or internal) markets, common markets and also more advanced forms of integration. [1., 3.]
1. Free trade area (FTA) - participating countries agree to reduce or eliminate tariffs and/ or non-tariff barriers to trade between members while maintaining unilateral trade barriers towards the rest of the world. The latter characteristic, i.e., unilateral external trade policy, will usually mean the inclusion of rules of national origin for the traded goods and services sector as part of the FTA ( in the European Economic Community it was EFTA).
2. Customs union (CU) This is an FTA with a common tariff for the rest of the world; the latter means that rules of national origin will be dropped from the agreement.
3. Common market (CM) This is a CU plus agreement on free movement of factors of production within the common market area, i.e., grater mobility of capital and labour.

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