Regional Economic Integration Chapter 9
Political Union
A central political apparatus coordinates economic, social, and foreign policy.
Custom Union
A group of countries committed to removing all barriers to the free flow of goods and services between each other and the pursuit of a common external trade policy.
Economic Union
A group of countries committed to removing all barriers to the free flow of goods, services, ae nd factors of production between each other. The adoption of a common currency, the harmonization of tax rates and the pursuit of a common external trade policy.
A Common Market
A group of countries committed to removing all barriers to the free flow of goods, services, and factors of production between each other and the pursuit of a common external trade policy.
Regional Economic Integration
Agreements among countries in a geographical region to reduce and ultimately remove tariff and non tariff barriers to the free flow of goods, services, and factors of production between each other. Nowhere has the movement toward regional economic integration been more successful than in Europe. Similar moves toward regional integration are being pursued elsewhere in the world. Canada, Mexico, and the United States have implemented NAFTA
Free Trade Area
All barriers to the trade of goods and services among member countries are removed. A group of countries committed to removing all barriers to the free flow of goods and services between each other but pursuing external trade policies.
European Union
An economic and political union of 28 countries (2014) that are located in Europe. It is the product of two political factors 1- the devastation of western Europe during two world wars and the desire for a lasting peace and 2- the European nation desire to hold their own on the wyorlds political and economic stage.
Single Market
BY creating a single market, NAFTA aimed to lower the price for goods and services in the United States, Canada and Mexico.
Enlargement of the European Union
Enlargement of the EU into eastern Europe has been a possibility since the collapse of communism at the end of the 1980s and by the end of 1990s, 13 countries had applied to be EU members. To qualify for the EU membership, the applicants had to privatize state assets, deregulate markets, restructure industries, and tame inflation.
EU
European Union
Free Trade
Free trade agreements are the most popular form of regional economic integration accounting for almost ninety percent of regional agreement.
The Establishment of the Euro
In February 1992, EC members signed the Maastricht Treaty, which committed them to adopting a common currency by January 1, 1999. The Euro is now used by 18 of the 28 member-states of the European Union, these 18 states are members of what is often referred to as the Euro Zone. Treaty agreed to in 1992, but not ratified until January 1, 1994, that committed the 12 member states of the European Community to a closer economic and political union.
Economic Union
Involves the free flow of products and factors of production among member countries and the adoption of a common external trade policy, but it also requires a common currency, harmonization of members, taxes and common monetary and fiscal policy.
Common Market
Is the next level of economic integration. It has no barriers to trade among member countries, includes a common external trade policy and allows factors of production to move freely among members.
NAFTA
North American Free Trade Agreement
Mercosur
Pact among Argentina, Brazil, Paraguay, and Uruguay to establish a free trade area. It originated in 1988 as a free trade pack between Brazil and Argentina. The pact expanded in March 1990 to include Paraguay and Uruguay. Venezuela joined in 2006 and became a full member in 2014.
Levels of economic integration
Several levels of economic integration are possible in theory. From least integrated to most integrated, they are a free trade area, a customs union, a common market, and economic union and finally a full political union.
EU
The EU is an economic union, although an imperfect one because not all members of the EU have adopted the euro, the currency of the EU; differences in tax rates and regulations across countries still remain and some markets such as the markets for energy are still not fully deregulated.
Trade Creation
Trade created due to regional economic integration, occurs when high cost domestic producers are replaced by low cost foreign producers within a tree trade area.
Trade Diversion
Trade diverted due to regional economic integration, occurs when low cost foreign suppliers outside a free trade area are replaced higher cost suppliers within a free trade area.
