Sequence the following in increasing order of integration of member economies:
1. Free Trade Area
2. Economic Union
3. Custom Union
4. Preferential Trade Agreements
5. Common Market
Choose the correct answer from the options given below:

Correct option is C

The increasing order of integration among economies is as follows:

1. Preferential Trade Agreements (PTA):

   • The least integrated level, providing reduced tariffs for specific goods among member nations.

2. Free Trade Area (FTA):

   • Allows free trade of goods and services between member countries with minimal or no tariffs.

3. Custom Union:

   • Builds on the FTA by adding a common external tariff for trade with non-member countries.

4. Common Market:

   • Includes the benefits of a customs union but allows the free movement of capital, labor, and other factors of production.

5. Economic Union:

   • The highest level of integration, combining a common market with coordinated economic policies and often a single currency.

Thus, the correct sequence is: 4, 1, 3, 5, 2.

Information Booster:

1. Preferential Trade Agreements (PTA):

   • Includes reduced tariffs for selected goods/services between member countries.
   • Example: India-MERCOSUR PTA.

2. Free Trade Area (FTA):

   • Eliminates most tariffs between member nations while allowing each to maintain its own tariffs with others.
   • Example: NAFTA (now USMCA).

3. Custom Union:

   • Adds a common external tariff to an FTA, harmonizing trade relations with non-members.
   • Example: European Union Customs Union.

4. Common Market:

   • Removes restrictions on the movement of goods, services, labor, and capital among members.
   • Example: European Economic Area (EEA).

5. Economic Union:

   • Integrates economies through common policies and often a single currency.
   • Example: The European Union (EU).