What is a customs union
a group of states that have agreed to charge the same tariffs on foreign countries, and have also agreed to trade freely with each other
What is a Free Trade Area
- a grouping of countries which have agreed to trade freely with each other, therefore without any protectionist policies such as import duties on their goods that they trade between each other
- distinguished from a customs union in tha they have not agreed to have a trade policy towards foreign countries
- e.g., NAFTA - North American Free Trade Agreement
What is a common market, and give an example
Common Market
- the same as a customs union, plus an extension
- a group of countries where there are few or no duties between them, and a joint external tariff imposed.
- the common market allows not only for the free movement of goods and services, but also of labour and capital
- EU single market for eg
define a monetary union
Monetary union
- an agreement between a group of countries, where monetary policy may be delegated to a central authority
- the countries within the union share the same currency
- for instance, the Eurozone
Define the Eurozone
Eurozone
- group of 19 member states that have all adopted the euro as their currency
- monetary authority has been delegated to the ECB
EU possible 10/20 markers
- Explain the main features of a single market, such as that which exists within the EU (10)
- Evaluate the possible economic costs and benefits to an EU member state of being part of the EU single market (20)
- ETVT further enlargement of the EU would be beneficial to an EU existing member state (20)
- Evaluate the extent to which individuals and firms in a EU member state benefit from membership of the EU (20)
- Explain how membership of a customs union, such as the EU, affects the pattern and volume of trade between countries (10)
- Evaluate the costs and benefits for a country of joining a currency union, such as the eurozone
why is a common external tariff policy within a customs union important?
It prevents one country from undercutting another’s trade policy, and therefore gaining more revenue as more countries will export to teh country with the lower import duty
