What is FTA?
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Free Trade Agreement (FTA) takes down the trade walls and the duty for the product/service trades between the countries who have signed the agreement, providing the exclusive trade benefits to each other. FTA has been signed centered on the nearby nations or certain region such as European Union(EU) or North American Free Trade Agreement (NAFTA) and thus, it is often called Free trade Agreement(FTA:Regional Trade Agreement).
Depending on the degree of the integration of economy amongst the nations which signed FTA (Regional Trade Agreement), they can be divided into four steps.
Types and the Scope of Free Trade Agreement
Free Trade Agreement (FT)
Abolishing various measures of trade restrictions for the trade liberalization amongst the member states including the duty rate (i.e.: NAFTA)
Customs Union
In addition to the trade liberalization within the Free Trade zone amongst the member states, the common duty rates are applied to the countries outside the Free Trade Zone. Even for the duty rates for the countries outside the Free Trade Zone, the nations inside the zone take the joint steps (i.e. : Mercado Commum Do Sul (MERCOSUR))
Common Market
In addition to the trade policies on a level of the Customs Union, free transfer of the production elements such as the labor and capital is possible between the member states(i.e. : European Communities (EC), Central American Common Market (CACM))
Economic Union
Economic unions mutually adjust all economic policies and joint implementation of the policies such as the financial, fiscal and social welfare amongst the member states (i.e. European Union (EU))
Complete Economic Union
The independent economic policies of the member states are cancelled and every economic policy is combined and operated under the single economic system and a supranatural agency such as a single council for the member states is built
