key term - Preferential tariff

Definition

A preferential tariff is a lower rate of duty or tax imposed on goods when they are imported from certain countries, with which the importing country has a trade agreement. This system is designed to promote stronger trade relationships and economic cooperation between the member countries of an agreement.

Related terms

Free Trade Agreement:

An agreement between two or more countries to reduce barriers to imports and exports among them through elimination of tariffs, import quotas, and preferences on most (if not all) goods and services traded between them.

Trade Bloc:

A type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, (tariffs and non-tariff barriers) are reduced or eliminated among the participating states.

Economic Integration:

An economic arrangement between different regions marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies