Which trade arrangement involves reducing tariffs among member countries while maintaining their own external tariffs?

Which trade arrangement involves reducing tariffs among member countries while maintaining their own external tariffs?

• A. Free Trade Area
• B. Customs Union
• C. Regional Trading Bloc
• D. Common Market

Answer: (A)

This question tests how tariffs are handled in different regional trade arrangements. In a Free Trade Area, members remove tariffs on trade among themselves but each country keeps its own external tariffs against non-members. This means internal trade becomes tariff-free while external trade policy stays under national control. The other options involve a shared external tariff (a Customs Union), a broader, nonspecific term (Regional Trading Bloc), or a setup that also includes free movement of people and capital along with a common external policy (Common Market). Therefore, the arrangement described is a Free Trade Area.

This question tests how tariffs are handled in different regional trade arrangements. In a Free Trade Area, members remove tariffs on trade among themselves but each country keeps its own external tariffs against non-members. This means internal trade becomes tariff-free while external trade policy stays under national control. The other options involve a shared external tariff (a Customs Union), a broader, nonspecific term (Regional Trading Bloc), or a setup that also includes free movement of people and capital along with a common external policy (Common Market). Therefore, the arrangement described is a Free Trade Area.