CA Foundation · Business Economics · International Trade
Member countries of a bloc abolish tariffs on trade among themselves and also adopt a common external tariff on imports from non-members. Such a bloc is called:
Such a bloc is a customs union. Members remove tariffs on mutual trade and also apply one common tariff to non-members. In a free trade area, by contrast, every member keeps its own separate tariff on imports from outside countries.
- Aa free trade area
- Ba customs unionCorrect
- Ca preferential trading arrangement
- Da monetary union
Explanation
The common external tariff is the feature that separates a customs union from a free trade area. In a free trade area, each member keeps its own tariff against non-members. A preferential arrangement only gives limited tariff cuts on some goods. A monetary union concerns a common currency, which is not mentioned here.
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