A. The present EU policy on FTA
Trade policies of the EU have not followed the simple pattern of international free trade. EU trade policies have exhibited a special type of managed liberalization for the past fifteen years (Axtman 1988).
First of all, the EU is attempting to develop free trade areas which are located in each nation. Within this area, members have no tariffs between member states. By using these areas, nations that have joined the EU can export and import efficiently, without any tariffs. All members have made the free trade area to promote free trade (Johnson & Turner 2000).
Secondly, the EU pursues a custom union between member nations. The custom union means free custom between members in trade. Unlike the free trade area, the custom union is an abstract concept. A custom union, as the name implies, needs a general trade policy toward at least third countries. For example, country A makes a promise to country B regarding the excise on a special product. If country A wants trade with another country C, they have to fix the same custom within the Euro-zone. Consequently, they can export the product to other countries at the same price and can also import the same way among these three countries (Johnson & Turner 2000).
Thirdly, the EU aims for a single market. The single European market stands for ‘free movement’ of people, goods, services and capital. This single market brings about more positive integration on Europe. EU members can move the capital, labour and services to another EU nation, so easily without any problems or processes (Deutsch 1999).
Lastly, the final purpose of the EU policy is the economic and monetary union. This is like an enormous single nation. The largest economic and monetary union at present throughout the world is the Euro-zone. In this region, members can use the Euro, which is a single European currency, in their transactions. The Euro is designed to help build the single market. As a consequence of the Euro, the EU makes a profit, for instance citizens and products travel to another region easily, eliminating exchange rate problems, creating a single financial market and protecting against future shocks (Gavin 2001).
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