CSEET · Economic and Business Environment · Global Environment
Which of the following is the correct ordering of regional economic integration, starting from the loosest arrangement and moving to the deepest?
The correct order from loosest to deepest is free trade area, customs union, common market and economic union. Each stage adds a feature: first internal tariffs go, then a common external tariff, then free movement of factors, and finally harmonised economic policies.
- ACustoms union, free trade area, common market, economic union
- BFree trade area, customs union, common market, economic unionCorrect
- CCommon market, free trade area, economic union, customs union
- DFree trade area, common market, customs union, economic union
Explanation
A free trade area removes internal tariffs only. A customs union adds a common external tariff. A common market adds free movement of labour and capital. An economic union adds harmonised economic policies. The option placing customs union first is wrong because a customs union needs a free trade area as its base.
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