Country X wants to encourage trade by eliminating trade barriers with the three countries along its borders. Country X wants the group of countries to adopt a common external trade policy toward nonmembers and to allow citizens in any of the member countries to practice their trades in any of the member nations. Which form of economic integration is Country X most likely considering?

Question

Quizplus · Accepted Answer

A common market involves eliminating trade barriers and allowing free movement of goods, services, and factors of production, such as labor, among member countries. Additionally, a common market also involves adopting a common external trade policy toward nonmembers. This is the closest form of economic integration to what Country X is considering. A free trade area only involves eliminating trade barriers, but does not include the free movement of factors of production or a common external trade policy. A customs union involves eliminating trade barriers and adopting a common external trade policy, but does not allow for the free movement of factors of production. An economic union involves all the aspects of a common market, as well as a common currency and coordinated economic policies.

Country X Wants to Encourage Trade by Eliminating Trade Barriers