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Economic Integration · Paper 1 — Free Economics SL Practice Questions
1FoundationSAQ-SRegional economic agreements (EU, NAFTA etc.)4 marksPaper 1~6 min
The European Union (EU) is a regional trading bloc that has evolved through successive stages of economic integration: from a free trade area to a customs union, then to a common market, and finally to an economic and monetary union.
(a)
Define the term 'regional economic agreement'. [2 marks]
(b)
Explain how the transition from a free trade area to a customs union represents a deeper level of economic integration. [2 marks]
Solutions
2MasterySAQ-SRegional economic agreements (EU, NAFTA etc.)4 marksPaper 1~6 min
The European Union (EU) operates a customs union with a common external tariff (CET) applied to all imports from non-member countries. The United States–Mexico–Canada Agreement (USMCA), like its predecessor NAFTA, is a free trade area in which each member country sets its own external tariffs independently.
(a)
Explain one advantage for the EU of negotiating trade agreements with non-member countries compared to individual member states negotiating separately, as occurs in a free trade area. [2 marks]
(b)
Analyse how trade creation can occur when a country joins a customs union such as the EU. [2 marks]
Solutions
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