NAME .

Priyanka pande

ROLL NO. 191203

Q.2 Write a note on Regional Trade Agreements. Differentiate between free trade agreement
and customs union with example.  

ANS . Regional trade agreements (RTAs) have risen in number and reach over the years,
including a notable increase in large plurilateral agreements under negotiation. Non-
discrimination among trading partners is one of the core principles of the WTO; however,
RTAs, which are reciprocal preferential trade agreements between two or more partners,
constitute one of the exemptions and are authorized under the WTO, subject to a set of
rules. Regional trading agreements refer to a treaty that is signed by two or more
countries to encourage free movement of goods and services across the borders of its
members. The agreement comes with internal rules that member countries follow
among themselves. Tariffs are a common element in international trading.

 Difference between free trade agreement and custom unions

1. Free trade
 Where a group of countries agree to trade without barriers between themselves,
but maintain their own individual barriers with countries outside the area.
 The free trade area is the least restrictive and loosest form of economic
integration among countries
 In a free trade area, all barriers to trade among member countries are removed.
 Eg: NAFTA

2. Custom unions
 This goes further than free trade, which eliminates not only barriers to trade between
the member countries but also to have a common tariff barriers against the rest of the
world.
 Members of a customs Union dismantle barriers to trade in good and services among
themselves
 A customs Union establishes a common trade policy with respect to nonmembers
 Eg; the single market