Free Trade Area: A free trade area occurs when a group of countries agree to eliminate tariffs between themselves, but maintain their own external tariff on imports from the rest of the world. The North American Free Trade Area is an example of a FTA. When the NAFTA is fully implemented, tariffs of automobile imports between the US and Mexico will be zero. However, Mexico may continue to set a different tariff than the US on auto imports from non-NAFTA countries.
Customs Union: A customs union occurs when a group of countries agree to eliminate tariffs between themselves and set a common external tariff on imports from the rest of the world.
Common Market: A common market establishes free trade in goods and services, sets common external tariffs among members and also allows for the free mobility of capital and labor across countries.
Economic Union: An economic union typically will maintain free trade in goods and services, set common external tariffs among members, allow the free mobility of capital and labor, and will also relegate some fiscal spending responsibilities to a supra-national agency.
Regional Economic Integration plays a major importance role in global trade. It enhances trade among member through the elimination of customs barriers, and to quickly and substantially improves the allocation of resources and general dynamism, by fostering greater competition among the participating countries and by providing more incentives for the introduction of new and rapidly changing...