Search within English part of Government. Examples include improved purchasing power, more jobs, cheaper products and more opportunities for new and existing companies. Possible benefits for people Improved purchasing power through economic growth Various studies have been done on the economic consequences of TTIP.
A customs union is a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas.
Common competition policy is also helpful to avoid competition deficiency. Purposes for establishing a customs union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries.
It is the third stage of economic integration. Customs union is established through trade pact. A trade agreement by which a group of countries charges a common set of tariffs to the rest of the world while granting free trade among themselves.
It is a partial form of economic integration that offers an intermediate step between free-trade zones which allow mutual free trade but lack a common tariff system and common markets which, in addition to the common tariffs, also allow free movement of resources such as capital and labour between member countries.
A free-trade zone with common tariffs is a customs union. It has long been recognized that tariff barriers generally reduce the quantity of trade between countries.
Under most circumstances this reduction in trade protects certain domestic producers, but it also translates into higher costs for consumers in both the importing and the exporting country. Many governments attempt to resolve this problem by protecting politically favoured producers while also reducing consumer costs.
Customs unions, along with other forms of partial economic integration, offer one means of achieving that balance. One flaw in the free-trade zone approach is the absence of common external tariffs.
Since the countries may differ in the tariff barriers presented to the outside world, importers will always prefer to have their materials shipped through low-tariff countries, even if fuel, labour, or other costs are higher.
Such, roundabout shipping methods are unnecessarily wasteful.
While the common external tariffs levied by a customs union avoid the problem of wasteful shipping patterns, they do not solve the problem of wasteful production, a problem sometimes referred to as trade diversion. Take, for example, a country that charges a set tariff to all other countries for a given goods; if trade occurs at all, it will ideally be in goods produced by the lowest-cost foreign producer.
The quantity of trade will not be as high as it would be if there were no tariff at all and too much of the goods may be produced domestically at a higher cost, but at least the incremental goods bought from the foreign producer will have been efficiently produced.
The net effect is to reduce trade with the efficient, low-cost producer. The increased volume of trade in a customs union is sometimes referred to as trade creation.
Other forms of economic integration include common markets, economic unions and federations. Common markets allow free passage of labour, capital and other productive resources by reducing or eliminating internal tariffs on goods and by creating a common set of external tariffs.
Economic Unions closely coordinate the national economic policies of their member countries. Federations such as, the Swiss Federation of Trade Unions coordinate policy through a federal agency. Examples of customs unions include the Zollverein, a 19th-century organization formed by several German states under Prussian leadership and the European Union, which was a customs union at one point in its development but later achieved full economic integration as a common market.
Benefits of a Customs Union: Producers get a larger and wider market and can thus produce more goods. The CU lowers cost of production: A large single market encourages mass production of goods and services thereby lowering the cost of production by taking advantage of economies of scale.
It offers equal protection to all manufacturers against third country imports and minimizes the possibility of transshipment or trade deflection. It levels the economic environment and promotes fair competition by reducing disparities in production costs for manufacturers in the various countries with regard to taxes on imported raw materials and intermediate goods from third countries.
Traders get wider source of goods therefore, bargaining power in dealing with suppliers resulting in cost savings for their customers.
Because the CU removes border controls and trade barriers, importing goods becomes faster since traders do not have to go through so many customs procedures in different countries. This reduces transaction costs and results in timely deliveries. Consumers get a wider choice of goods and they also benefit from the advantages of increased productivity which leads to lower prices.
In a CU with a Free Trade Area, intra-regional trade is enhanced as there are no tariffs or quotas on goods originating from within the region, ii. It seeks to maintain a price advantage for regionally produced goods over goods produced outside the Customs Union.
Land locked countries that are neighbours to CU members who have access to the sea, will in actual terms no longer be landlocked, given that their goods will be cleared at first port of entry and will have free circulation rights when moving to such, countries as all customs formalities would have been discharged at the port of entry.
A customs union promotes cross-border investment and serves to attract investment, both Foreign Direct Investment FDI and domestic investment, as the enlarged market is more attractive to investors than the previously small individual national markets. List of Customs Unions:2 Summary The Commission’s assessment of the likely benefits of the Transatlantic Trade and Investment Par-tnership (TTIP) is based on analysis carried out by the Centre for Economic Policy Research, a leading.
The Comprehensive Economic and Trade Agreement (CETA) is a freshly negotiated EU-Canada treaty. Once applied, it will offer EU firms more and better business opportunities in . The Potential Economic Benefits for Texas of a Free Trade Agreement between the United States and the European Union February 22, October 31, Dr.
M. Ray Perryman Import and export activity is an essential aspect of optimizing economic performance. Economic Integration: Overview. For a variety of reasons it often makes sense for nations to coordinate their economic policies. The first is to join the European Economic Area, a solution adopted by all but one of the EFTA states that did not join the EU.
But the EEA now consists of just one small country, Norway, and two. The Directorate General for Trade of the European Commission is in charge of implementing the common trade policy of the European Union.