CSEET · Economic and Business Environment · Global Environment
Member countries of a bloc abolish tariffs on trade among themselves, but each member keeps its own separate tariff on imports from non-members. This arrangement is best described as a:
This is a free trade area. Members eliminate tariffs on trade among themselves but each one keeps its own tariff policy toward non-members. If they adopted a single common external tariff, the arrangement would become a customs union instead.
- ACustoms union
- BCommon market
- CFree trade areaCorrect
- DEconomic union
Explanation
The defining feature is that internal tariffs are removed while each member retains an independent external tariff. That is a free trade area. A customs union would require a common external tariff, so it is wrong here.
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