Which economic model gains more profits for non-EU country, EU’s Customs Union or FTA (i.e. EFTA, DCFTA) ?

The OECD defines regional trading arrangement as “an agreement among governments to liberalize trade and possibly to co-ordinate other trade related activities. There are four principal types of regional trading arrangements a:

A free trade area is a grouping of countries within which tariffs and non-tariff trade barriers between the members are generally abolished but with no common trade policy toward non-members. The North American Free Trade Area (NAFTA) and the European Free Trade Association (EFTA) are examples of free trade areas.

Customs unions are established through trade pacts. The participant countries set up common external trade policy, but in some cases they use different import quotas. Common competition policy is also helpful to avoid competition deficiency. Purposes for establishing a customs union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries. It is the third stage of economic integration. A customs union was defined by the General Agreement on Tariffs and Trade as a type of trade bloc which is composed of a free trade area with a common external tariff.

A common market is a customs union with provisions to liberalize movement of regional production facts (people and capital).

An economic union is a common market with provisions for the harmonization of certain economic policies, particularly macroeconomic and regulatory. The European Union is an example of an economic union.

The CET is what distinguishes a customs union from a free trade area agree to a common external tariff (CET)

The Deep and Comprehensive Free Trade Areas (DCFTA) are three free trade areas established between the European Union, and Georgia, Moldova and Ukraine respectively. The DCFTAs are part of each country's EU Association Agreement. They allow Georgia, Moldova and Ukraine access to the European Single Market in selected sectors and grant EU investors in those sectors the same regulatory environment in the associated country as in the EU. The agreements with Moldova and Georgia have been ratified and officially entered into force in July 2016, although parts of them were already provisionally applied. The agreement with Ukraine was provisionally applied since 1 January 2016 and formally entered into force on 1 September 2017.

Unlike standard free trade areas, the DCFTA is aimed to offer the associated country the ‘four freedoms’ of the EU Single Market: free movement of goods, services, capital, and people. Movement of people however, is in form of visa-free regime for short stay travel, while movement of workers remains within the remit of the EU Member States.

Switzerland is a world leader in pharmaceuticals, biotechnology, machinery, banking and insurance. Liechtenstein, like Switzerland, is highly industrialized and specialized in capital-intensive and Research & Development driven technology products. The Icelandic economy benefits from renewable natural resources, not least rich fishing grounds, and has increasingly diversified into other industries and services. Abundant natural resources also contribute significantly to Norway’s economic strength, including oil and gas exploration and production, and fisheries, as well as important service sectors such as maritime transport and energy-related services”.ie.”