Economic integration whereby countries remove all barriers to trade among themselves,but each country determines its own barriers against nonmembers,is called a(n)________.
A) economic union
B) customs union
C) common market
D) free trade area

Question

Quizplus · Accepted Answer

A free trade area is an economic integration where member countries remove all barriers to trade among themselves, but each country determines its own barriers against nonmembers. Examples of free trade areas include NAFTA and ASEAN Free Trade Area. Option A is incorrect because an economic union involves closer economic integration than a free trade area, such as the adoption of a common currency and coordination of economic policies. Option B is incorrect because in a customs union, member countries not only remove trade barriers among themselves but also establish a common external trade policy towards nonmembers. Option C is incorrect because in a common market, in addition to free movement of goods and services, there is also free movement of capital and labor among member countries.

Economic Integration Whereby Countries Remove All Barriers to Trade Among