I (Meaning and importance of Exports) Unit Structure

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1. Preferential Trade Arrangement 
It is the lowest form of integration. The members of the 
group impose lower trade barriers on member nations. However, 
the members individually impose trade barriers on non-members. 
An example of this type of integration is SAPTA that was signed by 
seven countries of south Asia including India in 1995.
 
Features
The main features are as follows: 
(a) The member nations reduce trade barriers on member nations
(b) The member nations individually impose trade barriers on non 
members. 
(c) There are restrictions on movement of labour and capital within 
the group 
(d) The member nations do not adopt common economic policies 
2. Free Trade Area 
In this case, the member nations remove all trade barriers 
amongst them. But each nation retains or imposes its own barriers 
on trade with non-members. Examples of types of integration 
include SAFTA, NAFTA etc, 
Features 
The main features of Free Trade Area are as follows: 
(a) The member nations remove trade barriers on member nations. 
(b) The member nations individually impose trade barriers on non-
members. 
(c) There are restrictions on movement of labour and capital within 
the group 
(d) The members do not adopt common economic polices 
3. Customs Union 
It is similar to Free Trade Area. It removes all trade barriers 
on member nations. In addition, it imposes common external 
barriers on non-members. The best example is that of European 
Economic Community (EEC) that came into existence in 1957 by 
signing Treaty of Rome by six countries- France, Italy, Germany, 
Belgium, Netherlands and Luxemburg.
Features: 
The main features are as follows: 
(a) Removal of all trade barriers amongst member nations. 
(b) Collective bargaining with non-members. 

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