M.com Part-1 ( SEM-1 ) Roll No.

27

MASTER OF COMMERCE
ADVANCED ACCOUNTANCY
Semester: 1
Academic Year: 2015-16
Submitted in Partial Fulfilment of the
Requirement for the Award of the Degree of
MASTER OF COMMERCE
SUBMITTED BY
VIPUL KESHWANI (ROLL NO.27)
M.com (Adv. Accountancy)
SEMESTER-1
ACADEMIC YEAR 2015-16
ECONOMIC OF GLOBAL TRADE AND
FINANCE
SUBMITTED THROUGH
Prof. Adarsh Suri
1

M.com Part-1 ( SEM-1 ) Roll No. 27

TYPES OF
ECONOMIC
UNION
2

M.com Part-1 ( SEM-1 ) Roll No. 27

DECLARATION

I hereby declare that project entitled TYPES OF ECONOMIC UNION

.Submitted for the M.COM (Advanced Accountancy) Degree is my original work
and the project has not formed the basis for the award of any Degree,
Associateship, Fellowship or any other similar titles.

I further declare that the information has been tapped from the primary and
secondary sources of information which have been properly accorded.

Place:

Mumbai

Vipul Keshwani

Date:

(M.COM STUDENT)

M.com Part-1 ( SEM-1 ) Roll No. 27

ACKNOWLEDGEMENT

I wish to thank Professor ADARSH SURI for his encouragement and support
throughout the project it is due to his best efforts and continuous guidance and that
I was able to prepare this project.

I would like to thank coordinator professor SANTOSH GHAG for his constant
support in the process of making the project.

I would like to thank our Principal MR..ASHOK WADIA for giving me the
opportunity to work on this project.
I would also like to thank the University of Mumbai to give me this opportunity to
explore the valuable information related to this project.

M.com Part-1 ( SEM-1 ) Roll No. 27

CERTIFICATE OF ORIGINALITY

This is to certify that the project titled TYPES OF ECONOMIC UNION. Is an original work
of the student and is being submitted in partial fulfillment for the award of the Masters Degree
in Advanced Accountancy (M.COM) of MUMBAI UNIVERSITY.

This report has not been submitted earlier either to the university or to any other
University/Institution for the fulfillment of the requirement of a course of study.

Dr. ASHOK WADIA

Signature of Principal
Date:
Place: MUMBAI

Signature of External Examiner

Place: MUMBAI
Date:

Prof. SANTOSH GHAH

Signature of Coordinator
Date:
Place: MUMBAI

COLLEGE SEAL

Signature of Supervisor
Place: MUMBAI
Date:

M.com Part-1 ( SEM-1 ) Roll No. 27

SR.NO

TITLE

PG.NO

Executive summary

07

Ch.1
1.1
1.2
1.3
1.4

Introduction to economic union

Objectives of economic union
Benefits and challenges of economic union
Advantages of economic union
Disadvantages of economic union

08
08
09
10
11

Ch.2
2.1
2.2
2.3
2.4
2.5

Types of economic union

European union
History
Graph presentation of European union on its GDP
Eurasian economic union
History

12
12
17
18
19

List of economic union

Proposed economic union
The east African community
History
Expansion
Southern African development community
History
SADC protocol
SADC FTA
Challenges facing member countries
Aims
Arab custom unions
African economic community
History
Formation
Sub national
NEW west partnership
Trade agreement

23
23
23
23
26
27
28
29
29
30
30
31
32
32
33
35
36
36

Ch.4

Conclusions

37

Ch.5

Bibliography

38

Ch.3
3.1
3.1.1
3.1.2
3.1.3
3.2
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.3
3.4
3.4.1
3.4.2
3.5
3.5.1
3.5.2

M.com Part-1 ( SEM-1 ) Roll No. 27

EXECUTIVE SUMMARY

The object of this project is to analyze the evolution of economic union from its
inspection latest incarnation in the form of Eurasian union comprising the complex
array of agreements forming its substance and mandate.
The study focuses on the adequacy or the inadequacy of the system as it evolved
and functioned in an environment of changing international economic and political
reality.
The study also attempts to grapple with the more difficult question of looking at
the future prospects of the system, the strains that it will need to face and the
subsequent changes that are called for in its approach, content and functioning,
taking into account the future governance needs of the world economy.

This project consists of three main parts.

Introduction of economic union
Second part includes types of economic union
Third and the last part includes List of economic union

CHAPTER 1:7

M.com Part-1 ( SEM-1 ) Roll No. 27

INTRODUCTION

ECONOMIC UNION

1.1)WHAT IS ECONOMIC UNION ?

An economic union is an agreement between two or more sovereign nations to coordinate trade
policies. Progression to a formal economic union typically involves several stages of increasing
cooperation between nations. Member states in these various stages commonly share land
borders, though there are many exceptions to this. Economic unions increase the efficiency of
trade by eliminating trade barriers and cooperating on monetary policy.
The first stage in this process involves establishing free trade agreements (FTAs). FTAs involve
eliminating import tariffs, or taxes, between member states to encourage internal trade. Products
originating outside of the free trade zone must be identified as such, because each member state
may have different tariff policies for foreign goods. Without this identification process, foreign
goods will typically enter the free trade zone through the country with the lowest import tariffs.
Other than agreeing to identify these foreign products, FTAs place few restrictions on the
economic affairs of member states.

1.2)OBJECTIVES OF ECONOMIC UNION :The Unions objectives can be read in the Lisbon Treaty Art. 3 TEU and include, among others:

The promotion of peace and the well-being of the Unions citizens

An area of freedom, security and justice without internal frontiers
Sustainable development based on balanced economic growth and social justice
A social market economy - highly competitive and aiming at full employment and social
progress
A free single market

The Union shall also combat social exclusion and discrimination and promote social justice and
protection, equality between women and men, solidarity between generations and the protection
of childrens' rights.

M.com Part-1 ( SEM-1 ) Roll No. 27

The European Union also establish a set of values in Article 2 TEU. The EU Court can take
values and aims into account when it decides on case law.
The first and most important EU objective was the establishment of a common market.
Subsequent treaties included the aims of establishing: an Economic and Monetary Union; a
Common Foreign and Security Policy; and, an area of Justice and Home Affairs.

1.3)BENEFITS AND CHALLENGES OF ECONOMIC UNION :Economic Union (EU) is the end point of an ambitious and historic stage of integrated market
changes that not only challenge the structure and foundation of modern day liberal capitalism but
also offer, if successful, a wealth of opportunity in the goods, labour and service industries of the
European Union. A fiscal extension to the principles of the Schengen Agreement of 1985 offered
a financial breakthrough where multiple crises through the years during the latter part of the
1980s offered physical deficit in the sense that unemployment was on the rise and inflation was
at a post war high. This long winded process required widespread policy integration over a
spread of 40 years in order to achieve such monetary union, bringing Europe to both political
strains at times but also a decade of growth and success. Something that started as a Single
Market, which led to an unseen level of economic cooperation in its second stage then followed
by full single currency implementation has been seen by many, including the former British
Chancellor of the Exchequer and Prime Minister, Gordon Brown, as Europes greatest political
and economic achievement. EMU would mean the European Community (EU) would be
recognised as a global actor in the financial markets but the single currency would have an
international impact as an anchor for exchange rate stability in a 21st century global market
desperate for growth, employment and low levels of inflation.

The Economic benefits of EMU are plentiful, and definitely outweigh the challenges in number.
However, the risk factor of EMU on a general scale is what were trying to assess and the first
relevant benefit of EMU would be its optimistic but also responsible convergence criteria for full
EMU membership. This is seen by many as setting a fantastic example of monetary discipline
with penalties of up to 0.5% of GDP available to the Commission and the Central Bank for use
against violating states. Whilst this convergence criteria anchors its legitimacy on the Integrity of
the German Deutschemark as a pre euro currency, it only began as a strict guideline, it is only
since the crisis of 2008 that a revised growth & stability pact is being proposed that makes these
criterion binding. Under these rules, government debt cannot exceed 60% of GDP, and a
governments current account deficit cannot exceed 3% in any fiscal year. This is seen as
responsible budget economics but also very rigid in its implementation and planning. Average
nominal Interest paid cannot exceed 2% above the average of the top 3 financially performing
states; this indicator is also used for Price stability, where inflation is limited to 1.5% above the
9

M.com Part-1 ( SEM-1 ) Roll No. 27

top 3s average. These rules, set down and audited by the ECB make good ground for the second
benefit of EMU.
The European Central Bank, as said before, has a very rigid and ordered system of governance
similar to that of the Bundesbank. This means that when it comes to its implementation of the
common interest rate and price stability, every provision of the Growth & Stability Pact is taken
into consideration and the bank works for the benefit of all 17 member states. This model was
proven to have worked in Germany in the 90s and had similar results in the Euros first decade.
Further success includes the reduction in transaction costs between member states because of the
same exchange rate and Rate of Interest (ROI). This, if the UK was to be a member of EMU,
may have seen savings of between 50-100 per annum for the average citizen. This successful
theory is mirrored throughout Europe, with the European Commission suggesting that
elimination of transaction costs could boost the GDP of the countries concerned by an average of
0.4% by 2015, and the cost of transporting goods and services between the common market
using the single currency are significantly lower since 2001. This also allows for a great deal of
price transparency for large business from both Europe and around the world but in conjunction
with reduced exchange rate uncertainty, the increase in Foreign Direct Investment (FDI) has
allowed for more business looking to come and invest in Europe. This not only gives the
Eurozone states an incentive to compete with each other for a healthier domestic private sector
but it also gives the incentive for strengthened intra-MEU trade, meaning states, whilst
competing with each other, also trade with each other much more easily. In this respect, EMU
has removed the possibility of devaluation of the single currency, which countries have used in
the past and has increased inflationary pressure. The ECB prides itself in its policy of keeping
Interest rates low on average. This would cater for an economy capable of expanding rapidly in
the global markets because of its flexibility through a lower ROI.
To conclude, EMU has its advantageous benefits and its sometimes crippling challenges, and it is
important to remember that the Euro, as a result of the stages of EMU such as ERM and the
Growth & Stability Pact, is still in deep teething mode. It is a young currency and most of the
issues concerning EMU revolve around the flexibility of the ECB in dealing with situations such
as the Eurozone Crisis. Any Eurosceptic can argue that EMU may damage national sovereignty
and integrity of a national currency but nobody can deny the awesome growth in government
GDP and foreign investment paired with impressive drops in unemployment from 2000-2009.
And this in many respects has small influences such as the Athens Olympic Games in 2004 and
the Green Energy Directives of 2001 to thank for. Countries involved in EMU are ever investing
in this multilateral venture, its successes could be greater than those seen in its first decade and
its progress to date is more than admirable. However, speedy and effective reforms to the
structure and workings of the ECB and the G&S Pacts are vital after this recession is over in
order for the Euro to remain whole, sustainable and worthy of international trust and praise,
because after such a tumultuous period in its history, it seems to be overcoming the first few
hurdles and is on the path to a very successful future in the global markets.
10

M.com Part-1 ( SEM-1 ) Roll No. 27

1.4)ADVANTAGE OF ECONOMIC UNION :Trade Creation: Member countries have (a) wider selection of goods and services not previously
available; (b) acquire goods and services at a lower cost after trade barriers due to lowered tariffs
or removal of tariffs (c) encourage more trade between member countries the balance of money
spend from cheaper goods and services, can be used to buy more products and services
Greater Consensus: Unlike WTO with high membership (147 countries), easier to gain consensus
amongst small memberships in regional integration
Political Cooperation: A group of nation can have significantly greater political influence than
each nation would have individually. This integration is an essential strategy to address the
effects of conflicts and political instability that may affect the region. Useful tool to handle the
social and economic challenges associated with globalization
Employment Opportunities: As economic integration encourage trade liberation and lead to
market expansion, more investment into the country and greater diffusion of technology, it create
more employment opportunities for people to move from one country to another to find jobs or
to earn higher pay. For example, industries requiring mostly unskilled labor tends to shift
production to low wage countries within a regional cooperation
1.5)DISADVANTAGE OF ECONOMIC UNION:Creation of Trading Blocs: It can also increase trade barriers against non-member countries.
Trade Diversion: Because of trade barriers, trade is diverted from a non-member country to a
member country despite the inefficiency in cost. For example, a country has to stop trading with
a low cost manufacture in a non-member country and trade with a manufacturer in a member
country which has a higher cost.
National Sovereignty: Requires member countries to give up some degree of control over key
policies like trade, monetary and fiscal policies. The higher the level of integration, the greater
the degree of controls that needs to be given up particularly in the case of a political union
economic integration which requires nations to give up a high degree of sovereignty.

CHAPTER 2:11

M.com Part-1 ( SEM-1 ) Roll No. 27

TYPES OF ECONOMIC UNION

2.1)EUROPIAN UNION
The European Union (EU) is a politico-economic union of 28 member states that are located
primarily in Europe. The EU operates through a system of supranational institutions and
intergovernmental-negotiated decisions by the member states. The institutions are: the European
Commission, the Council of the European Union, the European Council, the Court of Justice of
the European Union, the European Central Bank, the European Court of Auditors, and the
European Parliament. The European Parliament is elected every five years by EU citizens.
The EU traces its origins from the European Coal and Steel Community (ECSC) and the
European Economic Community (EEC), formed by the Inner Six countries in 1951 and 1958,
respectively. In the intervening years, the community and its successors have grown in size by
the accession of new member states and in power by the addition of policy areas to its remit. The
Maastricht Treaty established the European Union under its current name in 1993 and introduced
European citizenship. The latest major amendment to the constitutional basis of the EU, the
Treaty of Lisbon, came into force in 2009.
The EU has developed a single market through a standardised system of laws that apply in all
member states. Within the Schengen Area, passport controls have been abolished. EU policies
aim to ensure the free movement of people, goods, services, and capital, enact legislation in
justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and
regional development.
The monetary union was established in 1999 and came into full force in 2002. It is currently
composed of 19 member states that use the euro as their legal tender. Through the Common
Foreign and Security Policy, the EU has developed a role in external relations and defence. The
union maintains permanent diplomatic missions throughout the world and represents itself at the
United Nations, the WTO, the G8, and the G-20.
With a combined population of over 508 million inhabitants, or 7.3% of the world population,
the EU in 2014 generated a nominal gross domestic product (GDP) of 18.495 trillion US dollars,
constituting approximately 24% of global nominal GDP and 17% when measured in terms of
purchasing power parity. As of 2014 the EU has the largest economy in the world, generating a
GDP bigger than any other economic union or country. Additionally, 26 out of 28 EU countries
have a very high Human Development Index, according to the UNDP. In 2012, the EU was
awarded the Nobel Peace Prize.
12

M.com Part-1 ( SEM-1 ) Roll No. 27

2.2)HISTORY:After World War II, European integration was eyed as an escape from the extreme nationalism
that had devastated the continent. The 1948 Hague Congress was a pivotal moment in European
federal history, as it led to the creation of the European Movement International and of the
College of Europe, where Europe's future leaders would live and study together. 1952 saw the
creation of the European Coal and Steel Community, which was declared to be "a first step in the
federation of Europe.". The supporters of the Community included Alcide De Gasperi, Jean
Monnet, Robert Schuman, and Paul-Henri Spaak.
In 1957, Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany signed the
Treaty of Rome, which created the European Economic Community (EEC) and established a
customs union. They also signed another pact creating the European Atomic Energy Community
(Euratom) for co-operation in developing nuclear energy. Both treaties came into force in 1958.
The EEC and Euratom were created separately from ECSC, although they shared the same courts
and the Common Assembly. The EEC was headed by Walter Hallstein (Hallstein Commission)
and Euratom was headed by Louis Armand (Armand Commission) and then tienne Hirsch.
Euratom was to integrate sectors in nuclear energy while the EEC would develop a customs
union among members.
Through the 1960s, tensions began to show, with France seeking to limit supranational power.
Nevertheless, in 1965 an agreement was reached and on 1 July 1967 the Merger Treaty created a
single set of institutions for the three communities, which were collectively referred to as the
European Communities. Jean Rey presided over the first merged Commission (Rey
Commission).
In 1989, the Iron Curtain fell, enabling the union to expand further (Berlin Wall pictured).
In 1973, the Communities enlarged to include Denmark (including Greenland, which later left
the Community in 1985, following a dispute over fishing rights), Ireland, and the United
Kingdom. Norway had negotiated to join at the same time, but Norwegian voters rejected
membership in a referendum. In 1979, the first direct, democratic elections to the European
Parliament were held.
Greece joined in 1981; Portugal and Spain in 1986. In 1985, the Schengen Agreement led the
way toward the creation of open borders without passport controls between most member states
and some non-member states. In 1986, the European flag began to be used by the Community
and the Single European Act was signed.
13

M.com Part-1 ( SEM-1 ) Roll No. 27

In 1990, after the fall of the Eastern Bloc, the former East Germany became part of the
Community as part of a reunited Germany. With further enlargement planned for former
communist states, Cyprus, and Malta, the Copenhagen criteria for candidate members to join the
EU were agreed upon in June 1993.

Maastricht Treaty and after

The European Union was formally established when the Maastricht Treatywhose main
architects were Helmut Kohl and Franois Mitterrandcame into force on 1 November 1993.
The treaty also gave the name European community to the EEC, even if it was referred as such
before the treaty. In 1995, Austria, Finland, and Sweden joined the EU. In 2002, euro banknotes
and coins replaced national currencies in 12 of the member states. Since then, the eurozone has
increased to encompass 19 countries. In 2004, the EU saw its biggest enlargement to date when
Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and
Slovenia joined the Union.
2009, the Lisbon Treaty entered into force.
On 1 January 2007, Romania and Bulgaria became EU members. In the same year, Slovenia
adopted the euro,[40] followed in 2008 by Cyprus and Malta, by Slovakia in 2009, by Estonia in
2011, by Latvia in 2014 and by Lithuania in 2015. In June 2009, the European Parliament
elections were held leading to the second Barroso Commission, and by July, Iceland formally
applied for EU membership, but has since suspended negotiations.

CARICOM Single Market and Economy

On 1 December 2009, the Lisbon Treaty entered into force and reformed many aspects of the
EU. In particular, it changed the legal structure of the European Union, merging the EU three
pillars system into a single legal entity provisioned with a legal personality, created a permanent
President of the European Council, the first of which was Herman Van Rompuy, and
strengthened the High Representative, Catherine Ashton.
In 2012 the Union received the Nobel Peace Prize for having "contributed to the advancement of
peace and reconciliation, democracy, and human rights in Europe." On 1 July 2013, Croatia
became the 28th EU member.
The CARICOM Single Market and Economy, also known as the Caribbean Single Market and
Economy (CSME), is an integrated development strategy envisioned at the 10th Meeting of the
Conference of Heads of Government of the Caribbean Community (CARICOM) which took
place in July 1989 in Grand Anse, Grenada. The Grand Anse Declaration had three key Features:
14

M.com Part-1 ( SEM-1 ) Roll No. 27

Deepening economic integration by advancing beyond a common market towards a Single
Market and Economy.
Widening the membership and thereby expanding the economic mass of the Caribbean
Community (e.g. Suriname and Haiti were admitted as full members in 1995 and 2002
respectively).
Progressive insertion of the region into the global trading and economic system by strengthening
trading links with non-traditional partners.
A precursor to CARICOM and its CSME was the Caribbean Free Trade Agreement, formed in
1965 and dissolved in 1973.

Single market and economy

The CSME will be implemented through a number of phases, first being the CARICOM Single
Market (CSM). The CSM was initially implemented on January 1, 2006 with the signing of the
document for its implementation by six original member states. However the Revised Treaty of
Chaguaramas establishing the CSME had been provisionally applied by twelve member states of
CARICOM from February 4, 2002 under a Protocol on the Provisional Application of the
Revised Treaty of Chaguaramas. Nine protocols had been drafted to amend the Original Treaty
of Chaguaramas and had been consolidated into the Revised Treaty[2] signed at Nassau in 2001,
with a number of the Protocols having been applied in part or in full from their creation in 19971998 including the provision on the Free Movement of Skilled Nationals.
As of July 3, 2006, it now has 12 members. Although the Caribbean Single Market and Economy
(CSME) has been established, in 2006 it was only expected to be fully implemented in 2008.
Later in 2007 a new deadline for the coming into effect of the Single Economy was set for 2015,
however following the global 2007-08 financial crisis and the resulting Great Recession, in 2011,
CARICOM Heads of Government declared that progress towards the Single Economy had been
put on pause. The completion of the CSME with the Single Economy will be achieved with the
harmonization of economic policy, and possibly a single currency.

At the eighteenth Inter-Sessional CARICOM Heads of Government Conference in St. Vincent

and the Grenadines from 1214 February 2007, it was agreed that while the framework for the
Single Economy would be on target for 2008, the recommendations of a report on the CSME for
the phased implementation of the Single Economy would be accepted. The Single Economy is
now expected to be implemented in two phases.

Phase 1

15

M.com Part-1 ( SEM-1 ) Roll No. 27

Phase 1 was to take place between 2008 and 2009 with the consolidation of the Single Market
and the initiation of the Single Economy. Its main elements would include:
The outline of the Development Vision and the Regional Development Strategy
The extension of categories of free movement of labour and the streamlining of existing
procedures, including contingent rights
Full implementation of free movement of service providers, with streamlined procedures
Implementation of Legal status (i.e. legal entrenchment) for the CARICOM Charter for Civil
Society
Establishment and commencement of operations of the Regional Development Fund
Approval of the CARICOM Investment Regime and CARICOM Financial Services Agreement,
to come into effect by January 1, 2009
Establishment of the Regional Stock Exchange
Implementation of the provisions the Rose Hall Declaration on Governance and Mature
Regionalism, including:
The automatic application of decisions of the Conference of Heads of Government at the national
level in certain defined areas.
The creation of a CARICOM Commission with Executive Authority in the implementation of
decisions in certain defined areas.
The automatic generation of resources to fund regional institutions.
The strengthening of the role of the Assembly of Caribbean Community Parliamentarians.
Further technical work, in collaboration with stakeholders, on regional policy frameworks for
energy, agriculture, sustainable tourism, agro-tourism, transport, new export services and small
and medium enterprises.
During Phase 1 it is also expected that by January 1, 2009, there would be:
Negotiation and political approval of the Protocol on Enhanced Monetary Cooperation
Agreement among Central Banks on common CARICOM currency numeraire
Detailed technical work on the harmonisation of taxation regimes and fiscal incentives (to
commence on January 1, 2009).
Progress and delays
16

M.com Part-1 ( SEM-1 ) Roll No. 27

While progress on the elements of Phase 1 has not resulted in its completion by 2009, a number
of its elements have been met, including:
The outline of the Development Vision and the Regional Development Strategy
The extension of categories of free movement of labour (to now include to household domestics,
nurses, teachers and workers holding specific categories of vocational qualifications) and the
streamlining of existing procedures, including contingent rights
Full implementation of free movement of service providers, with streamlined procedures
Establishment of the Regional Development Fund and Regional Stock Exchange
Notable elements that have yet to be completed are; legal entrenchment for the CARICOM
Charter for Civil Society, approval of the CARICOM Investment Regime and CARICOM
Financial Services Agreement (although in August 2013 Finance Ministers of the member states
in a Community Council meeting approved the draft CARICOM Financial Services Agreement
and the draft amendment to the Intra-CARICOM Double Taxation Agreement), and
implementation of the provisions the Rose Hall Declaration on Governance and Mature
Regionalism.

Phase 2
Phase 2 is to take place between 2010 and 2015 and consists of the consolidation and completion
of the Single Economy. It is expected that decisions taken during Phase 1 would be implemented
within this time period, although the details will depend on the technical work, consultations and
decisions that would have been taken. Phase 2 will include:
1.)Harmonisation of taxation systems, incentives and the financial and regulatory environment.
2.)Implementation of common policies in agriculture, energy-related industries, transport, small
and medium enterprises, sustainable tourism and agro-tourism.
3.)Implementation of the Regional Competition Policy and Regional Intellectual Property
Regime.
3.)Harmonisation of fiscal and monetary policies.
4.)Implementation of a CARICOM Monetary Union.

17

M.com Part-1 ( SEM-1 ) Roll No. 27

2.3)GRAPH PRESENTATION OF EUROPEAN

UNION ON ITS GDP (2004)

2.4)Eurasian Economic Union

18

M.com Part-1 ( SEM-1 ) Roll No. 27

The Eurasian Economic Union (EAEU or EEU) is an economic union of states located primarily
in northern Eurasia. A treaty aiming for the establishment of the EEU was signed on 29 May
2014 by the leaders of Belarus, Kazakhstan and Russia, and came into force on 1 January 2015.
Treaties aiming for Armenia's and Kyrgyzstan's accession to the Eurasian Economic Union were
signed on 9 October 2014 and 23 December, respectively. Armenia's accession treaty came into
force on 2 January 2015. Kyrgyzstan's accession treaty came into effect on 6 August 2015. It
participated in the EEU from the day of its establishment as an acceding state.

In 1994, the President of Kazakhstan, Nursultan Nazarbayev, first suggested the idea of creating
a regional trading bloc during a speech at Moscow State University. Numerous treaties were
subsequently signed to establish the trading bloc gradually. Many politicians, philosophers and
political scientists have since called for further integration towards a political, military and
cultural union. However modern-day Kazakhstan has insisted the union stay purely economic as
it seeks to keep its independence and sovereignty intact. In spite of that, two EAEU member
statesBelarus and Russiaform a political union: the Union State; and all EAEU member
states participate in the Collective Security Treaty Organization, an intergovernmental mutual
defense alliance.

The Eurasian Economic Union has an integrated single market of 183 million people and a gross
domestic product of over 4 trillion U.S. dollars (PPP). The EEU introduces the free movement of
goods, capital, services and people and provides for common transport, agriculture and energy
policies, with provisions for a single currency and greater integration in the future. The union
operates through supranational and intergovernmental institutions. The Supreme Eurasian
Economic Council is the "Supreme Body" of the Union, consisting of the Heads of the Member
States. The other supranational institutions are the Eurasian Commission (the executive body),
the Eurasian Intergovernmental Council and the Court of the EEU (the judicial body)

2.5)History
19

M.com Part-1 ( SEM-1 ) Roll No. 27

After the end of the Cold War and the Dissolution of the Soviet Union, Russia and the Central
Asian republics were weakened economically and faced declines in GDP. Post-Soviet states
underwent economic reforms and privatisation. The process of Eurasian integration began
immediately after the break-up of the Soviet Union to salvage economic ties with Post-Soviet
states through the creation of the Commonwealth of Independent States on 8 December 1991 by
the presidents of Belarus, Kazakhstan and Russia.

In 1994, during a speech at Moscow State University President of Kazakhstan, Nursultan

Nazarbayev, suggested the idea of creating a regional trading bloc in order to connect and profit
from the growing economies of Europe and East Asia. The idea was quickly seen as a way to
bolster trade, boost investments in the region, and serve as a counterweight to Western
integration unions.

Founding treaties (1990s)

Meeting of the leaders of the Commonwealth of Independent States (CIS) in Bishkek, 2008. The
CIS initiated the lengthy process of Eurasian integration.
During the 1990s, the Eurasian integration process was slow, possibly due to the economic crisis
experienced after the dissolution of the Soviet Union and the size of the countries involved
(Russia, Belarus and Kazakhstan cover an area of about 20 million km). As a result, numerous
treaties have been signed by member states to establish the regional trading bloc gradually.
In 1995, Belarus, Kazakhstan, Russia, and later acceding states Kyrgyzstan and Tajikistan signed
the first agreements on the establishment of a Customs Union. Its purpose was to gradually lead
the way toward the creation of open borders without passport controls between member states.
In 1996, Belarus, Kazakhstan, Russia and Kyrgyzstan signed the Treaty on Increased Integration
in the Economic and Humanitarian Fields to begin economic integration between countries to
allow for the creation of common markets for goods, services, capitals, labour, and developing
single transport, energy and information systems.
In 1999, Belarus, Kazakhstan, Russia, Kyrgyzstan and Tajikistan signed the Treaty on the
Customs Union and the Single Economic Space by clarifying the goals and policies the states
would undertake in order to form the Eurasian Customs Union and the Single Economic Space.

Eurasian Economic Community (20002014)

20

M.com Part-1 ( SEM-1 ) Roll No. 27

To promote further economic integration and more cooperation, in 2000 Belarus, Kazakhstan,
Russia, Kyrgyzstan and Tajikistan established the Eurasian Economic Community (EurAsEC)
which Uzbekistan joined in 2006. The treaty established a common market for its member states.
The Eurasian Economic Community was modelled on the European Economic Community. The
two had a comparable population size of 171 million and 169 million, respectively.
A Treaty on a Single Economic Space by Belarus, Kazakhstan, Russia and Ukraine was signed in
2003 and ratified in 2004, but the process was stalled after the Orange revolution.
In 2007, Belarus, Kazakhstan and Russia signed an agreement to create a Customs Union
between the three countries.

Establishing the customs union and single market (2010-2014)

A session of the Supreme Eurasian Economic Council (composed of the union's heads of state) is
held at least once every year.The Customs Union of Belarus, Kazakhstan, and Russia (now the
Eurasian Customs Union) came into existence on January 1, 2010. The Customs Union's
priorities were the elimination of intra-bloc tariffs, establishing a common external tariff policy
and the elimination of non-tariff barriers. It was launched as a first step towards forming a
broader single market inspired by the European Union, with the objective of forming an alliance
between former Soviet states. The member states planned to continue with economic integration
and were set to remove all customs borders between each other after July 2011.
On 1 January 2012, the three states established the Eurasian Economic Space which ensures the
effective functioning of a single market for goods, services, capital and labour, and to establish
coherent industrial, transport, energy and agricultural policies. The agreement included a
roadmap for future integration and established the Eurasian Economic Commission (modelled on
the European Commission). The Eurasian Economic Commission serves as the regulatory
agency for the Eurasian Customs Union, the Single Economic Space and the Eurasian Economic
Union.

21

M.com Part-1 ( SEM-1 ) Roll No. 27

22

M.com Part-1 ( SEM-1 ) Roll No. 27

CHAPTER 3:LIST OF ECONOMIC UNION

PROPOSED
SUBNATIONAL

3.1)PROPOSED ECONOMIC UNION

3.1.1)THE EAST AFRICAN COMMUNTY :The East African Community (EAC) is an intergovernmental organisation composed of five
countries in the African Great Lakes region in eastern Africa: Burundi, Kenya, Rwanda,
Tanzania, and Uganda. Jakaya Kikwete, the president of Tanzania, is the EAC's chairman. The
organisation was founded originally in 1967, collapsed in 1977, and was revived on 7 July 2000.
In 2008, after negotiations with the Southern Africa Development Community (SADC) and the
Common Market for Eastern and Southern Africa (COMESA), the EAC agreed to an expanded
free trade area including the member states of all three organizations. The EAC is an integral part
of the African Economic Community.

The EAC is a potential precursor to the establishment of the East African Federation, a proposed
federation of its members into a single sovereign state. In 2010, the EAC launched its own
common market for goods, labour, and capital within the region, with the goal of creating a
common currency and eventually a full political federation. In 2013 a protocol was signed
outlining their plans for launching a monetary union within 10 years.
The geographical region encompassed by the EAC covers an area of 1,820,664 square kilometres
(702,962 sq mi), with a combined population of about 149,959,317

23

M.com Part-1 ( SEM-1 ) Roll No. 27

3.1.2)History
From left to right: President Yoweri Museveni of Uganda, President Mwai Kibaki of Kenya, and
President Jakaya Kikwete of Tanzania during the eighth EAC summit in Arusha, November
2006.
Kenya, Tanzania, and Uganda have a history of co-operation dating back to the early 20th
century. The customs union between Kenya and Uganda in 1917, which the then Tanganyika
joined in 1927, was followed by the East African High Commission (EAHC) from 1948 to 1961,
the East African Common Services Organization (EACSO) from 1961 to 1967, and the 1967 to
1977 EAC. Burundi and Rwanda joined the EAC on 6 July 2009.
Inter-territorial co-operation between the Kenya Colony, the Uganda Protectorate, and the
Tanganyika Territory was first formalised in 1948 by the EAHC. This provided a customs union,
a common external tariff, currency, and postage. It also dealt with common services in transport
and communications, research, and education. Following independence, these integrated
activities were reconstituted and the EAHC was replaced by the EACSO, which many observers
thought would lead to a political federation between the three territories. The new organisation
ran into difficulties because of the lack of joint planning and fiscal policy, separate political
policies, and Kenya's dominant economic position. In 1967, the EACSO was superseded by the
EAC. This body aimed to strengthen the ties between the members through a common market, a
common customs tariff, and a range of public services to achieve balanced economic growth
within the region.
In 1977, the EAC collapsed after ten years. Causes for the collapse included demands by Kenya
for more seats than Uganda and Tanzania in decision-making organs, disagreements with
Ugandan dictator Idi Amin who demanded that Tanzania as a member state of the EAC should
not harbor forces fighting to topple a government of another member state, and the disparate
economic systems of socialism in Tanzania and capitalism in Kenya. The three member states
lost over sixty years of co-operation and the benefits of economies of scale, although some
Kenyan government officials celebrated the collapse with champagne.

Later, Presidents Moi of Kenya, Mwinyi of Tanzania, and Museveni of Uganda signed the Treaty
for East African Co-operation in Arusha, Tanzania, on 30 November 1993 and established a Tripartite Commission for Co-operation. A process of re-integration was embarked on involving
tripartite programmes of co-operation in political, economic, social and cultural fields, research
and technology, defence, security, and legal and judicial affairs.

24

M.com Part-1 ( SEM-1 ) Roll No. 27

The EAC was finally revived on 30 November 1999, when the treaty for its re-establishment was
signed. It came into force on 7 July 2000, 23 years after the total collapse of the defunct
erstwhile community and its organs. A customs union was signed in March 2004, which
commenced on 1 January 2005. Kenya, the region's largest exporter, continued to pay duties on
goods entering the other four countries on a declining scale until 2010. A common system of
tariffs will apply to goods imported from third-party countries.

Political dimensions
It has been argued, perhaps humorously, that the key drivers for Kenya, Uganda, and Tanzania
are that Kenya wishes to export surplus capital, Uganda seeks an outlet for its surplus labour, and
Tanzania wants to realise a Pan-African vision. It has also been argued, however, that the
commonalities go far deeper. Many of the national elites old enough to remember the former
EAC often share memories and a sharp sense of loss at its eventual dissolution. More cynically,
others have argued that this historical ambition potentially provides politicians with the ability to
present themselves as statesmen and representatives of a greater regional interest. Furthermore,
EAC institutions bring significant new powers to dispose and depose to those who serve in them.

Some have questioned the extent to which the visions of a political union are shared outside the
elite and the relatively elderly, arguing that the youthful mass of the population is not well
informed about the process in any of the countries. Others have pointed to an enhanced sense of
East African identity developing from modern communications. Commitment to the formal EAC
idea is relatively narrow, in both social and generational terms, and thus many have questioned
the timetable for the project. Fast-tracking political union was first discussed in 2004 and
enjoyed a consensus among the three presidents of Kenya, Tanzania, and Uganda. Thus, a highlevel committee headed by Amos Wako of Kenya was commissioned to investigate the
possibility of speeding integration so as to achieve political federation sooner than previously
visualised. Yet, there have been concerns that rapid changes would allow popular reactionary
politics against the project. There has been an argument, however, that there are high costs that
would be required at the beginning and that fast-tracking the project would allow the benefits to
be seen earlier.
There remain significant political differences between the states. Museveni's success in obtaining
his third-term amendment raised doubts in the other countries. The single-party dominance in the
Tanzanian and Ugandan parliaments is unattractive to Kenyans, while Kenya's ethnic-politics
remains absent in Tanzania. Rwanda has a distinctive political culture with a political elite
committed to building a developmental state, partly to safeguard the Tutsi group against a return
to ethnic violence.
25

M.com Part-1 ( SEM-1 ) Roll No. 27

Other problems involve states being reluctant to relinquish involvement in other regional groups,
e.g., Tanzania's withdrawal from COMESA but staying within the SADC bloc for the Economic
Partnership Agreement negotiations with the European Union. Many Tanzanians are also
concerned because creating a common market means removing obstacles to the free movement
of both labour and capital. Free movement of labour may be perceived as highly desirable in
Uganda and Kenya, and have important developmental benefits in Tanzania; however, in
Tanzania there is widespread resistance to the idea of ceding land rights to foreigners, including
citizens of Kenya and Uganda.

Informal polls have indicate that most Tanzanians (80 percent) have an unfavorable view of the
East African Federation. Tanzania has more land than all the other EAC nations combined, and
some Tanzanians fear landgrabs by the current residents of the other EAC member nations

3.1.3)Expansion
In 2010, Tanzanian officials expressed interest in inviting Malawi, the Democratic Republic of
the Congo, and Zambia to join the EAC. Malawian Foreign Affairs Minister Etta Banda said,
however, that there were no formal negotiations taking place concerning Malawian membership.

South Sudan
The presidents of Kenya and Rwanda invited the Autonomous Government of Southern Sudan to
apply for membership upon the independence of South Sudan in 2011, and South Sudan was
reportedly an applicant country as of mid-July 2011. Analysts suggested that South Sudan's early
efforts to integrate infrastructure, including rail links and oil pipelines, with systems in Kenya
and Uganda indicated intention on the part of Juba to pivot away from dependence on Sudan and
toward the EAC. Reuters considers South Sudan the likeliest candidate for EAC expansion in the
short term, and an article in Tanzanian daily The Citizen that reported East African Legislative
Assembly Speaker Abdirahin Haithar Abdi said South Sudan was "free to join the EAC" asserted
that analysts believe the country will soon become a full member of the regional body.

On 17 September 2011, the Daily Nation quoted a South Sudanese MP as saying that while his
government was eager to join the EAC, it would likely delay its membership over concerns that
its economy was not sufficiently developed to compete with EAC member states and could
become a "dumping ground" for Kenyan, Tanzanian, and Ugandan imports. This was
contradicted by President Salva Kiir, who announced South Sudan had officially embarked on
26

M.com Part-1 ( SEM-1 ) Roll No. 27

the application process one month later. The application was initially deferred by the EAC in
December 2012, however incidents with Ugandan boda-boda operators in South Sudan have
created political tension and may delay the process.

In December 2012, Tanzania officially agreed to South Sudans bid to join the EAC, clearing the
way for the worlds newest state to become the regional blocs sixth member. In May 2013 The
EAC set aside $82,000 for the admission of South Sudan into the bloc even though admission
may not happen until 2016. The process, to start after the EAC Council of Ministers meeting in
August 2013, was projected to take at least four years. At the 14th Ordinary Summit held in
Nairobi in 2012, EAC heads of state approved the verification report that was presented by the
Council of Ministers, then directed it to start the negotiation process with South Sudan.
A team was formed to assess South Sudan's bid; however, in April 2014, the nation requested a
delay in the admissions process, presumably due to ongoing internal conflict.

Sudan
Sudan applied to join the EAC, but its membership is strongly opposed by Tanzania and Uganda.
They contend that because of Sudan's lack of a direct border with the EAC, its allegedly
discriminatory actions toward black Africans, its record of human rights violations, and its
history of hostilities with both Uganda and candidate country South Sudan, it is ineligible to join.
Sudan's application was rejected by the EAC in December 2011.

Somalia
Representatives of Somalia applied for membership in the EAC in March 2012. The application
was considered by the EAC Heads of State in December 2012, which requested that the EAC
Council work with Somalia to verify their application. In February 2015, the EAC again
deliberated on the matter but deferred a decision as verification had not yet started nor had
preparations with the government of Somalia been finalized

27

M.com Part-1 ( SEM-1 ) Roll No. 27

3.2)Southern African Development Community

The Southern African Development Community (SADC) is an inter-governmental organization
headquartered in Gaborone, Botswana. Its goal is to further socio-economic cooperation and
integration as well as political and security cooperation among 15 southern African states. It
complements the role of the African Union.

3.2.1)History
The origins of SADC lie in the 1960s and 1970s, when the leaders of majority-ruled countries
and national liberation movements coordinated their political, diplomatic and military struggles
to bring an end to colonial and white-minority rule in southern Africa. The immediate forerunner
of the political and security cooperation leg of today's SADC was the informal Frontline States
(FLS) grouping. It was formed in 1980.

The Southern African Development Coordination Conference (SADCC) was the forerunner of
the socio-economic cooperation leg of today's SADC. The adoption by nine majority-ruled
southern African countries of the Lusaka declaration on 1 April 1980 paved the way for the
formal establishment of SADCC in April 1980.

Membership of the FLS and SADCC sometimes differed.SADCC was transformed into SADC
on 17 August 1992, with the adoption by the founding members of SADCC and newly
independent Namibia of the Windhoek declaration and treaty establishing SADC. The 1992
SADC provided for both socio-economic cooperation and political and security cooperation. In
reality, the FLS was dissolved only in 1994, after South Africa's first democratic elections.
Subsequent efforts to place political and security cooperation on a firm institutional footing
under SADC's umbrella failed.

On 14 August 2001, the 1992 SADC treaty was amended. The amendment heralded the overhaul
of the structures, policies and procedures of SADC, a process which is ongoing. One of the
changes is that political and security cooperation is institutionalised in the Organ on Politics,
Defence and Security (OPDS). One of the principal SADC bodies, it is subject to the oversight of
the organisation's supreme body, the Summit, which comprises the heads of state or government.

28

M.com Part-1 ( SEM-1 ) Roll No. 27

The organisation holds its own multi-sport event in the form of the SADC Games, which was
first held in 2004 in Maputo. Originally planned for an earlier date in Malawi and Lesotho,
organisational issues led to abandonment of the plan and the SADC issuing a fine of $100,000
against Malawi. The first event in 2004 in Maputo resulted in over 1000 youths under-20 from
10 countries taking part in a sports programme including athletics, football, netball, boxing and
basketball.

3.2.2)SADC Protocols
SADC has 27 legally binding protocols dealing with issues such as Defence, Development, Illicit
Drug Trade, Free Trade and Movement of People.
Protocol on Energy (1996) - Intended to promote harmonious development of national energy
policies. These development strategies set out tangible objectives for SADC and its Member
States for infrastructure development in energy and its subsectors of woodfuel, petroleum and
natural gas, electricity, goal, renewable energy, and energy efficiency and conservation.
Protocol on Gender and Development - Member states are urged to accelerate implementation
efforts towards the achievements of concrete and transformative changes in the lives of women
and girls in our region.H.E. President Mutharika also expressed concern on the escalating
incidents of gender based violence in the region, especially those perpetrated against women and
girls, and used this occasion to sign a commitment to end child marriages, as part of the AU
campaign to end Child Marriages in Africa.

3.2.3)SADC FTA
The SADC Free Trade Area was established in August 2008, after the implementation of the
SADC Protocol on Trade in 2000 laid the foundation for its formation. Its original members were
Botswana, Lesotho, Madagascar, Mauritius, Mozambique, Namibia, South Africa, Swaziland,
Tanzania, Zambia and Zimbabwe, with Malawi joining later. Of the 15 SADC member states,
only Angola, the Democratic Republic of Congo and Seychelles are not yet participating.
On Wednesday 22 October 2008, SADC joined with the Common Market for Eastern and
Southern Africa and the East African Community to form the African Free Trade Zone, including
all members of each of the organizations. The leaders of the three trading blocs agreed to create a
single free trade zone, the African Free Trade Zone, consisting of 26 countries with a GDP of an
estimated $624bn (382.9bn). It is hoped the African Free Trade Zone agreement would ease
access to markets within the zone and end problems arising from the fact that several of the
member countries belong to multiple groups.
The African Free Trade Zone effective has been more than a hundred years in the making--a
trade zone spanning the whole African continent from Cape to Cairo and envisioned by Cecil
29

M.com Part-1 ( SEM-1 ) Roll No. 27

Rhodes and other British imperialists in the 1890s. The only difference is that the African Free
Trade Zone is the creation of independent African Countries. The idea is a free trade zone
spanning the whole continent from the Cape to Cairo (Cape Town in the Republic of South
Africa to Cairo in Egypt).
In addition to eliminating duplicative membership and the problem member states also
participating in other regional economic cooperation schemes and regional political and security
cooperation schemes that may compete with or undermine each other, the African Free Trade
Zone further aims to strengthen the bloc's bargaining power when negotiating international deals.

3.2.4)Challenges facing member countries

SADC countries face many social, development, economic, trade, education, health, diplomatic,
defence, security and political challenges. Some of these challenges cannot be tackled effectively
by individual members. Cattle diseases and organised-crime gangs know no boundaries. War in
one country can suck in its neighbours and damage their economies. The sustainable
development that trade could bring is threatened by the existence of different product standards
and tariff regimes, weak customs infrastructure and bad roads. The socio-economic and political
and security cooperation aims of SADC are equally wide-ranging, and intended to address the
various common challenges.

One significant challenge is that member states also participate in other regional economic
cooperation schemes and regional political and security cooperation schemes that may compete
with or undermine SADC's aims. For example, South Africa and Botswana both belong to the
Southern Africa Customs Union, Zambia is a part of the Common Market for Eastern and
Southern Africa, and Tanzania is a member of the East African Community.

3.2.5)Aims
SADC's aims are set out in different sources. The sources include the treaty establishing the
organisation (SADC treaty); various protocols (other SADC treaties, such as the corruption
protocol, the firearms protocol, the OPDS protocol, the health protocol and the education
protocol); development and cooperation plans such as the Regional Indicative Strategic
Development Plan (RISDP) and the Strategic Indicative Plan of the Organ (SIPO); and
declarations such as those on HIV and AIDS and food security. Not all of the pre-2001 treaties
and plans have been harmonised with the more detailed and recent plans such as the RISDP and
SIPO.
30

M.com Part-1 ( SEM-1 ) Roll No. 27

In some areas, mere coordination of national activities and policies is the aim of cooperation. In
others, the member states aim at more far-reaching forms of cooperation. For example, on
foreign policy the main aim is coordination and cooperation, but in terms of trade and economic
policy, a tighter coordination is in progress with a view to one day establishing a common market
with common regulatory institutions. The sustainable use of natural resources is commonly
shared by member states.
SADC has recently received the top position in a global comparison of indicators of Water
Cooperation prepared by international think-tank Strategic Foresight Group. SADC has scored
100 in the Water Cooperation Quotient,which examines active cooperation by riparian countries
in the management of water resources using 10 parameters, including legal, political, technical,
environmental, economic and institutional aspects. High performance in the Water Cooperation
Quotient also means low risk of war between countries in the concerned river basin to reduce
economic dependence of SADC countries on South Africa.

3.3)Arab Customs Union:

The Arab customs union is a customs union announced at the Arab League's 2009 Arab
Economic and Social Development Summit in Kuwait in order to achieve a functional customs
union by 2015 and an Arab common market by 2020 and to increase inter-Arab trade and
integration.
The announcement was made by the head of the Arab Customs Union Committee, Saud Al
Jefeiri, who recently presided over a two-day meeting of the committee at the Arab League
headquarters in Cairo, Egypt.
Participants in the meeting discussed the customs union plan and the structure of the customs
union and reviewed the legal structure and regulations for the union. The union will lead to the
establishment of an Arab common market.
Al Jefeiri, who represented Qatar at the meeting, said most Arab member countries agreed to put
forward an implementing plan, Egypt and Morocco asked for an independent accord to govern
the customs union.
The Arab customs union resolution contains 17 chapters and 179 articles regulating economic
and trade relationship between Arab countries, and aims to boost trade and investment among
member states.

31

M.com Part-1 ( SEM-1 ) Roll No. 27

3.4)African Economic Community:

The African Economic Community (AEC) is an organization of African Union states establishing
grounds for mutual economic development among the majority of African states. The stated
goals of the organization include the creation of free trade areas, customs unions, a single
market, a central bank, and a common currency (see African Monetary Union) thus establishing
an economic and monetary union.
Union of South American Nations:
The Union of South American Nations, USAN; (Spanish: Unin de Naciones Suramericanas,
UNASUR; Portuguese: Unio de Naes Sul-Americanas, UNASUL; Dutch: Unie van ZuidAmerikaanse Naties, UZAN) is an intergovernmental regional organization comprising 12 South
American countries.
The UNASUR Constitutive Treaty was signed on 23 May 2008, at the Third Summit of Heads of
State, held in Braslia, Brazil. According to the Constitutive Treaty, the Union's headquarters will
be located in Quito, Ecuador. On 1 December 2010, Uruguay became the ninth state to ratify the
UNASUR treaty, thus giving the union full legality. As the Constitutive Treaty entered into force
on 11 March 2011, UNASUR became a legal entity during a meeting of Foreign Ministers in
Mitad del Mundo, Ecuador, where they had laid the foundation stone for the Secretariat
Headquarters. The South American Parliament will be located in Cochabamba, Bolivia, while the
headquarters of its bank, the Bank of the South are located in Caracas, Venezuela.

On 4 May 2010, at a heads of state summit held in Campana, 75 km (47 mi) north of Buenos
Aires, former Argentine President Nstor Kirchner was unanimously elected the first Secretary
General of UNASUR for a two-year term.

3.4.1)HISTORY
Between the 15th and 19th centuries, the Spanish and Portuguese colonization brought about the
establishment and development of colonial empires in the Americas that integrated politically,
economically and culturally vast extensions of the continent each with their respective
metropolis.

Since the Spanish American wars of independence a trend towards the political integration of the
newly born republics of Hispanic America became strong in the thinking of several
independence leaders, influenced in turn by the Spanish Enlightenment and the French and
American revolutions. A notable early exponent of this trend was Francisco de Miranda, who
32

M.com Part-1 ( SEM-1 ) Roll No. 27

envisioned a federated republic encompassing all of Hispanic America, which he called
"Colombia".
The independence war efforts saw the concurrence of integrated armies composed by Spanish
Americans of diverse regions on both sides of the conflict (v.g. Patriots and Royalists), and
fighting all over the territories of many future nations. For example, the Army of the Andes
which was gathered in the United Provinces of the Ro de la Plata fought in Chile, Peru and
Ecuador, and later integrated with Simn Bolvar's Army (which itself included troops of future
Venezuela, Colombia and Ecuador) to further fight in Peru and the Upper Peru.
By the 1820s, the main proponent of a federation of the newly born republics was Simn
Bolvar, although this idea was shared by many contemporaneous, notably including Jos de San
Martn and Bernardo de Monteagudo (es), under either republican or constitutional monarchical
governments. In 1826, Bolvar summoned a conference to be held in Panama, which was to be
known as the "Amphictyonic" Congress of Panama because of the parallelism with the Hellenic
Amphictyonic League. The Congress was attended by Gran Colombia (including present-day
Colombia, Venezuela, Panama and Ecuador), the Federal Republic of Central America (including
present-day Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala), the United Mexican
States, and Peru. The ostensible intention was to form a defensive league that could prevent
foreign expansionism and foster the interests of the Spanish American republics. The Congress'
conclusions, however, were not ratified by the participants, except for Gran Colombia. Soon
after, both Gran Colombia and the United Provinces of Central America fell apart and the whole
of Hispanic America was balkanized by competing national governments.

3.4.2)Formation
The complete integration between the Andean Community and the Mercosur nations was
formalized during the meeting of South American heads of state that took place on 23 May 2008
in Braslia.
In the 2004 South American Summit, representatives of twelve South American nations signed
the Cuzco Declaration, a two-page letter of intent announcing the establishment of the thennamed "South American Community of Nations". Panama and Mexico were present as
observers. The leaders announced the intention of modeling the new community in the mold of
the European Union, including a unified passport, a parliament and, eventually, a single currency.
The then Secretary General of the Andean Community Allan Wagner speculated that an
advanced union such as the EU should be possible within the next fifteen years.

Naming
On 28 December 2005, Chilean former foreign minister Ignacio Walker proposed that the
Union's former designation, the South American Community of Nations, abbreviated as CSN, be
33

M.com Part-1 ( SEM-1 ) Roll No. 27

changed to South American Union; nevertheless, many members stated to him that that proposal
had already been rejected to prevent confusion since its acronym of U.S.A. (Spanish: Unin
Sudamericana) would be easily confused for the United States of America. In the press, the
phrase "United States of South America" was bandied about as an analogy to the United States to
reflect the economic and political power that the union would have on the world stage.
The name was finally changed on 16 April 2007 to Union of South American Nations. The new
name was jointly agreed by all member states during the first day of meeting at the First South
American Energy Summit, held at Isla Margarita, Venezuela.

Structure
Headquarters of UNASUR
At the moment, the provisional structure of the UNASUR is as follows:A permanent Secretariat
is to be established in Quito, Ecuador. The Secretary General, with a two-year mandate, is to be
elected on a consensual basis among the Heads of State of the member states. Former Argentine
President Nstor Kirchner was designated the first Secretary General on 4 May 2010.
The presidents of the member nations will have an annual meeting, which will have the superior
political mandate. The first meeting was in Braslia (Brazil) on 2930 September 2005. The
second meeting was in Cochabamba (Bolivia) on 89 December 2006. The third meeting was
held in Braslia on 23 May 2008.
Nstor Kirchner, UNASUR's first Secretary General.
Extraordinary meeting of heads of state and the UNASUR government held in Braslia.
The Presidency Pro Tempore, is exercised for a one-year period on a pro tempore basis by one of
the heads of state of each UNASUR Member State, the succession following alphabetical order.
The first leader to occupy this position was Chilean President Michelle Bachelet. According to
Decisions Reached in the Political Dialogue which was signed during the I South American
Energy Summit.
The ministers of foreign affairs of each country will meet once every six months. They will
formulate concrete proposals of action and of executive decision. The President of the
Mercosur's permanent representatives committee and the director of the Mercosur's department,
the Andean Community's general secretary, ALADI's general secretary and the permanent
secretaries of any institution for regional cooperation and integration, Amazon Cooperation
Treaty Organization among others, will also be present at these meetings.
Sectorial Ministers' meeting will be called upon by the presidents. The meetings will be
developed according to Mercosur's and CAN's mechanisms.

34

M.com Part-1 ( SEM-1 ) Roll No. 27

On 9 December 2005, a special commission was established in charge of advancing the process
of South American Integration. It consists of 12 members, whose function is to elaborate
proposals that will help the process of integration between the South American nations.
An Executive Commission, which was created by the II CSN meeting, was transformed in the
Political Commission or Delegates Council, according to Decisions Reached in the Political
Dialogue.

35

M.com Part-1 ( SEM-1 ) Roll No. 27

3.5)SUBNATIONAL :-

3.5.1)NEW West Partnership:

The New West Partnership is set of agreements that integrate the Canadian provinces of Alberta,
British Columbia and Saskatchewan. They were created on April 30, 2010.
It is composed of:
the New West Partnership Trade Agreement (NWPTA)
the New West Partnership International Cooperation Agreement
the New West Partnership Innovation Agreement

3.5.2)Trade Agreement
The New West Partnership Trade Agreement (NWPTA) is an internal trade agreement that seeks
to integrate the economies of three provinces. It is frequently characterized by supporters, critics,
and the media as an extension of the pre-existing Trade, Investment and Labour Mobility
Agreement (TILMA) between British Columbia and Alberta which was signed on 28 April 2006,
and provides a virtual economic union between the two provinces. However the provincial
government of Saskatchewan under the Saskatchewan Party's Brad Wall has said that the
NWPTA provides more equitable treatment for Saskatchewan's Crown corporations which was
one of the main public complaints that prevented Saskatchewan from joining TILMA in 2007.

The press release describing the NWPTA's creations describes it as a comprehensive agreement
to remove barriers to trade, investment and labour mobility between British Columbia, Alberta
and Saskatchewan. The agreement covers all public sector entities, including government
ministries and their agencies, boards and commissions, Crown corporations, municipalities,
school boards and publicly-funded academic, health and social service organizations.
The New West Partnership Trade Agreement came into effect on July 1, 2010. Alberta and
British Columbia already complied with the terms of the agreement at the time of its creation.
Saskatchewan is supposed to fully implement the agreement by July 1, 2013.

CONCLUSION:36

M.com Part-1 ( SEM-1 ) Roll No. 27

The object of this project is to analyze the evolution of economic union from its
inspection latest incarnation in the form of Eurasian union comprising the complex
array of agreements forming its substance and mandate.
The study focuses on the adequacy or the inadequacy of the system as it evolved
and functioned in an environment of changing international economic and political
reality.
The study also attempts to grapple with the more difficult question of looking at
the future prospects of the system, the strains that it will need to face and the
subsequent changes that are called for in its approach, content and functioning,
taking into account the future governance needs of the world economy.

This project consists of three main parts.

Introduction of economic union
Second part includes types of economic union
Third and the last part includes List of economic union.

37

M.com Part-1 ( SEM-1 ) Roll No. 27

Bibliography: -

1 www.britannica.com

2 www.financialdictionary.com
3 www.nasdaq.com
4 www.occupytheory.org (European union)
5 www.hazar.org (Eurasian union)

38