Which of the following forms of economic integration is a member nation free to impose duty against non-members

Answer Details

Economic integration refers to arrangements between countries to reduce or eliminate trade barriers among themselves. The different levels of integration, from least to most integrated, are:

1. Free trade area - member nations remove tariffs and quotas on trade among themselves, but each member retains the right to set its own external tariff on imports from non-member countries.
2. Customs union - like a free trade area, but members also adopt a common external tariff against non-members, so no individual member can set its own duty.
3. Common market - a customs union plus the free movement of factors of production (labour and capital) between member states.
4. Economic community/union - a common market with harmonised economic policies (monetary, fiscal, etc.).

In a free trade area, each member nation is free to impose its own duties against non-members because there is no requirement for a common external tariff. This flexibility is what distinguishes a free trade area from higher forms of integration. Once countries move to a customs union or beyond, they must agree on a uniform tariff schedule for non-member imports.