trading blocs

There are a number of types of trade blocs:

Free Trade Areas (FTA's)
Customs Unions
Common Markets
Economic Union
Free Trade Area
Sovereign countries belonging to a free trade area trade freely amongst themselves but have individual trade barriers with countries outside the free trade area. All members have most favoured nation status, which means that they are all treated equally.

Examples include the North American Free Trade Area (NAFTA) between the USA, Canada and Mexico; Asia Pacific Economic Cooperation (APEC) and the Common Market of Eastern and Southern Africa (COMESA).

Customs Union
In a Customs Union, countries have free trade amongst themselves, as in an FTA, but they are no longer fully sovereign over trade policy. There will be some degree of standardisation of trade policies. They will have a common external tariff (CET) which is applied to all countries outside the customs union. The countries will be represented at trade negotiations with organisations such as the World Trade Organisation by supra-national organisations, e.g. the European Union.

Common Market
This trading bloc is a customs union, which has, in addition, the free movement of factors of production such as labour and capital between the member countries without restriction. Mercosur is an example of a common market comprising of a number of South American nations. The European Union is also a common market and people and capital can flow between EU members without restriction.

Economic Union.....