The economic integration of several countries or states may take a variety of forms. The term covers preferential tariffs, free-trade associations, customs unions, common markets, economic unions, and full economic integration.
The parties to a system of preferential tariffs levy lower rates of duty on imports from one another than they do on imports from third countries.
In free-trade associations no duty is levied on imports from other member states, but different rates of duty may be charged by each member on its imports from the rest of the world.
A further stage is the customs union, in which free trade among the members is sheltered behind a unified schedule of customs duties charged on imports from the rest of the world.
A common market is an extension of the customs union concept, the additional feature being that it provides for the free movement of labour and capital among the members.
The term economic union denotes a common market in which the members agree to harmonize their economic policies generally.
Finally, total economic integration implies the pursuit of a common economic policy by the political units involved.