The international trade is trading of goods and services that occurs between two regions, regardless of its geographical background. This world-wide cooperation provides significant benefits to a wide range of population,throughout the free trade. In this video, we will focus on tariff elimination in the internal market of the European Union.
European Union, EU, is an international political and economic organization, consisting of 28 member countries in the Europe region. As it's shown on the map, the EU covers a large portion of the whole Europe region. This union works as political and economic protection of member countries from the hand of superpower, and tariff elimination in EU territory is one of its processes.
First of all, what is Tariff? The tariff is just the tax, but it is imposed by one country on goods and services from another country. For example, if the supplier exports the product into country B with a tariff of 30%, 30% of the product value will be added, and consumers in country B have to pay more.
Idea of Internal Market
Usually, this tax type,tariff, will be imposed on almost all product trading between different counties. However, in the EU, there is no tariff between member countries. Due to its negative influence on trading across the country, excluding the tariff could be considered as the international level trading cooperation.
Now, let’s go through various benefits that stakeholders can afford from the free trading system. By free trading, one of the largest stakeholders, the consumer, can gain access to higher quality and lower-priced product The company can also gain benefits. By increasing the competition, it encourages to make their business better and efficient, which results in growth, especially in terms of its financial account.In addition to that, it encourages workers. By interacting with a larger market, the growing company increases its scale, which raises their demand for workers. Thus, this provides higher wages and more job opportunities for workers.
This significant cooperation is done under the idea of an internal market. Typically, each country has its own market, and it is isolated from other countries' markets.In contrast to that, the EU considers the whole EU territory as one great market.Although transported occurs across the country boundaries, it is within one large market, therefore, the goods are services are excluded from the custom duty