Three countries,close to each other in the Pacific Rim,enter into an agreement to remove all tariffs and trade barriers between them.They decide on a common trade policy with regard to nonmembers.Faced with political backlash,the countries stop short of allowing mobility of factors of production such as labor and capital.Which of the following levels of economic integration best describes this arrangement?

Question

Quizplus · Accepted Answer

This arrangement is best described as a customs union, where countries remove trade barriers among themselves and adopt a common external trade policy, but do not allow free movement of factors of production.

Three Countries,close to Each Other in the Pacific Rim,enter into an Agreement