Correct option is C
A Free Trade Zone (FTZ) is typically a type of trade area where member countries agree to reduce or eliminate tariffs, quotas, and other barriers to trade among themselves. However, FTZs don't necessarily require a common external tariff on non-member countries, allowing member countries to maintain some autonomy over their trade policies. Therefore, Option c is the most accurate definition.
Information Booster:
Free Trade Zones (FTZs): These are areas where goods can be imported, handled, manufactured, and re-exported without being subject to customs duties and taxes.
In a Free Trade Zone, member countries focus on enhancing economic cooperation and reducing trade barriers within the region.
Common Market: A common market goes beyond the removal of tariffs and quotas to include the free movement of goods, services, people, and capital.
Customs Union: In this, member states apply a common external tariff but may not necessarily adopt free movement policies like a common market.
Examples of FTZs: NAFTA (North American Free Trade Agreement) and ASEAN (Association of Southeast Asian Nations) Free Trade Area are examples where countries reduce trade barriers among themselves but maintain independence for non-member imports.
Additional Information:
- Option a refers to a customs union rather than a free trade zone. A customs union requires members to impose a common external tariff.
- Option b is a characteristic of the European Union (EU) but doesn't fully describe a Free Trade Zone.
- Option d relates more to a common market, where deeper integration is seen with common policies beyond just trade, such as in agriculture, transport, and regional policy.
English
10 Questions
20 Marks
12 Mins
