• free trade

The absence of government intervention of any kind in international trade, so that

trade takes place without any restrictions (or barriers) between individuals or firms
in different countries.
• trade protection
Government intervention in international trade through the imposition of trade
restrictions (or barriers) to prevent the free entry of imports into a country and
protect the domestic economy from foreign competition.
• tariffs
Taxes on imported goods;
they are the most common form of
trade restriction.
Tariffs may serve two purposes: to protect a domestic industry from foreign
competition (a protective tariff); or to raise revenue for the government (a revenue
tariff). Whatever the purpose, the impacts on the economy are the same.
• quota
A type of trade protection that involves setting a legal limit to the quantity of a
good that can be imported over a particular time period (typically a year). (More
generally, a ‘quota’ is a limited or fixed number of things.)
• subsidy production subsidies
Payments per unit of output granted by the government to domestic firms that
compete with imports.
• economic integration
Refers to economic interdependence between countries, usually achieved by
agreement between countries to reduce or eliminate trade and other barriers
between them. There are various degrees of integration, depending on the type of
agreement and the degree to which barriers between countries are removed; see
trading bloc, free trade area, customs union, common market, monetary union.
• preferential trade agreement
An agreement between two or more countries to lower trade barriers between
them on particular products, resulting in easier access to the markets of other
members for the selected products, compared with the access of countries that
are not members.

• trading bloc
 A group of countries that have agreed to reduce tariff and other barriers to trade
for the purpose of encouraging the development of free or freer trade and
cooperation between them.
• free trade area
A type of trading bloc, consisting of a group of countries that agree to eliminate
trade barriers between themselves; it is the most common type of integration
area, and involves a lower degree of economic integration than a customs union or
common market. Each member country retains the right to pursue its own trade
policy towards non- member countries. An example of a free trade area is NAFTA
(North American Free Trade Agreement).

• common market
A type of trading bloc in which countries that have formed a customs union
proceed further to eliminate any remaining tariffs in trade between them; they
continue to have a common external policy (as in a customs union), and in addition
agree to eliminate all restrictions on movements of any factors of production
within them; factors affected are mainly labour and capital, which are free to cross
all borders and move, travel and find employment freely within all member
countries. The best-known common market is the European Economic
Community (EEC, the precursor of the present European Union).
• customs union
A type of trading bloc, consisting of a group of countries that fulfil the
requirements of a free trade area (elimination of trade barriers between members)
and in addition adopt a common policy towards all non-member countries;
members of a customs union also act as a group in all trade negotiations and
agreements with non-members. It achieves a higher degree of economic
integration than a free trade area, but lower than a common market.
• monetary union
A high form of economic integration, involving the adoption by a group of
countries of a single currency, such as some of the countries of the European
Union (‘euro zone’ countries) that have adopted the euro. Monetary integration in
addition involves the adoption of a common monetary policy carried out by a
single central bank, which is necessitated by the use of a single currency.