6 Forms of Economic Integration

Common Market

A customs union and additionally the four factors of production flow freely between member nations. Regulations regarding labour and capital are shared between member states.

Free Trade Area

When two or more nations make an agreement to completely eliminate tariffs on most (if not all) goods and services traded between them.

Complete Economic Integration

Member states completely forego independence of both monetary and fiscal policies.

Economic and Monetary Union

When a common market is established in which member states also adopt a common currency managed by a single central bank. Regulations regarding labour and capital are shared between member states.

Customs Union

When tariffs on all goods and services produced by one another are free of tariffs, while the member nations must also agree on common tariff rates on imports from all non- member countries

Preferential Trade Agreement

When two or more countries reduce or remove tariffs on particular goods or services produced in participating countries, or make other agreements reducing barriers to free trade between the nations