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24th September
2021
written by Tellus

The exception for the customs union was partly directed towards the creation of the European Economic Community (EC) in 1958. The COMMUNITY, originally made up of six European countries, is now known as the European Union (EU) and has twenty-seven European countries. The EU has gone beyond simply reducing barriers to trade between Member States and creating a customs union. It has moved towards even greater economic integration by becoming a common market – an agreement that removes obstacles to the mobility of factors of production such as capital and labour between participating countries. As a common market, the EU also coordinates and harmonises the fiscal, industrial and agricultural policies of each country. In addition, many EU members have created a single currency area by replacing their national currencies with the euro. As a multilateral trade agreement, GATT obliges its signatories to extend most-favoured-nation status to other trading partners participating in the WTO. Most-favoured-nation status means that each WTO member enjoys the same tariff treatment for its products in foreign markets as the competing “most favoured” country in the same market, thus excluding preferences or discrimination for a member state. It should be noted that as regards the authorisation of origin criteria, there is a difference in treatment between intermediate consumption of origin within and outside a free trade agreement. Normally, inputs from one part of the FTA are considered to be products originating in the other party when they are included in the manufacturing process of that other party. While a customs union requires all parties to set and maintain identical external tariffs for trade with non-parties, parties to a free trade area are not subject to such a requirement. Instead, they may import and maintain the customs procedure applicable to imports from non-Parties which they deem necessary.

[3] In a free trade area without harmonized external customs duties, the Parties will adopt a system of preferential rules of origin to eliminate the risk of relocation. [4] For example, one nation could allow free trade with another nation, with the exception of exceptions that prohibit the importation of certain drugs that are not authorized by its regulatory authorities, or animals that have not been vaccinated or processed foods that do not meet their standards. . . .

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