FTA refers to eliminating tariffs and quotas on most goods and services among members, but each retains its own external tariffs. Examples include NAFTA (now USMCA) and EFTA.

Levels of Economic Integration

• Preferential Trade Agreement (PTA): Countries offer reduced tariffs on select goods to each other while maintaining individual trade policies with outsiders. This is the shallowest form.
• Free Trade Area (FTA)
• Customs Union: Adds a common external tariff (CET) on non-members to an FTA, harmonizing trade policy toward outsiders. The EU began as one.
• Common Market: Extends customs union by allowing free movement of factors like labor and capital across borders.
• Economic and Monetary Union: Harmonizes fiscal and monetary policies, and often adopts a single currency, with supranational institutions. The Eurozone exemplifies this.
• Complete (Political) Union: Full unification of economic, fiscal, and political policies under a central authority, with synchronized sovereignty.

Source: The Hindu