1.

General introduction: the EU within the

context of regional integration worldwide
 General introduction: the EU within the
context of regional integration worldwide

Introduction
The European Union (EU) - most prominent scheme of
international economic integration (IEI).
International economic integration and Regional economic
Integration;
What is economic integration?
Free trade areas (FTAs or PTAs);
Customs unions (CUs);
Common markets (CMs);
Complete economic unions, or economic unions (EcUs);
Complete political unions (PUs);
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 General introduction: the EU within the context of
regional integration worldwide

 Free trade area - member nations (MNs) remove tarifs

among themselves, but retain their freedom to determine their
own policies vis-à-vis the outside world (the non-
participants);

 Customs union - MNs must conduct and pursue common

external commercial relations – they must adopt common
external tariffs (CETs) on imports from the non-participants;

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General introduction: the EU within the context of
regional integration worldwide

 Common market - free factor mobility across MNs’ frontiers –

capital, labour, technology and enterprises should move
unhindered between MNs;
 Complete economic union or economic union - CMs plus the
complete unification of monetary and fiscal policies;
 Complete political union - MNs literally become one nation
–the central authority needed in EcUs should be paralleled by
a common parliament and other institutions.

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General introduction: the EU within the context
of regional integration worldwide

 Sectoral integration;
 Negative and positive International economic integration;
 Negative Integration - simple act of the removal of
impediments on trade between MNs;
 Positive Integration - modification of existing instruments and
institutions; creation of new ones so as to enable the market of
the integrated area to function properly and effectively;

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General introduction: the EU within the context
of regional integration worldwide
Economic integration and WTO rules

 Basic WTO principles:

 Most favored nation (MFN);
 Non- discrimination;
 Transparency of instruments used to restrict trade (now called
tariffication);
 Promotion of growth and stability of the world economy.

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General introduction: the EU within the context
of regional integration worldwide
 GATT’s Article XXIV allows the formation of IEI schemes on
the understanding that
 they may not pursue policies which increase the level of
protection beyond that which existed prior to their formation;
 tariffs and other trade restrictions are removed on substantially
(at least 90 per cent of intra-MN trade) all the trade among
MNs;
 they become established within a reasonable period of time.
Economic integration and WTO principles of non-
discrimination;

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General introduction: the EU within the context
of regional integration worldwide
Economic integration worldwide
 421 RTAs and 230 of these are still in force (December 2008);
 Economic integration in Europe:
 EU is almost a complete economic union
 19 of its 27 MSs have the same currency (euro);
 EU has its own budget;
 President of the European Council;
 Foreign policy chief;

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General introduction: the EU within the context
of regional integration worldwide
 The European Free Trade Association (EFTA) is the other
major scheme of IEI in Europe;

 EFTA countries except Switzerland – that is, Iceland,

Liechtenstein and Norway – now belong to the European
Economic Area (EEA), a scheme introduced in 1992 which
provides economic but not political membership of the EU;

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General introduction: the EU within the context
of regional integration worldwide

 There are over 400 schemes of IEI in the world, of which the
EU is the most significant, influential and committed to the
deepest type of economic integration;
 Global Integration (WTO) vs Regional Integration;

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