Free Trade Blocs, A Major Step Towards Economic Integration

Free Trade Blocs Free trade blocs are intergovernmental agreements that limit regional barriers to trade by integrating different economies. The four types of trade blocs are Preferential Trade Area, Free Trade Area, Customs Union, and Common Market. The specific trade blocs included in this analysis are Mercosur, North American Free Trade Agreement, European Union. Preferential Trade Area (PTA) is when countries in the same geographical region agree to eliminate or reduce tariff barriers on certain goods. Similar to PTA, the Free Trade area is when two or more countries agree to eliminate or reduce barriers to trade and freely import and export goods between each other. Members of a trade bloc who remove trade barriers internally, while imposing a uniform tariff on non-member countries is an example of a Customs Union. Members of a Customs Union will come together and negotiate tariff regulations with countries outside their bloc. 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