ECONOMIC INTEGRATION :

CUSTOMS UNIONS AND FREE

TRADE AREAS

CR EAT E D B Y :
M A R I YA H H A I D A R
S H E I L L A A U D I TA
W I N TA R I A A QI L A
DEFINITION OF ECONOMIC INTEGRATION:
ECONOMIC INTEGRATION IS AN ARRANGEMENT
AMONG NATIONS THAT TYPICALLY INCLUDES
THE REDUCTION OR ELIMINATION OF TRADE
BARRIERS AND THE COORDINATION OF
MONETARY AND FISCAL POLICIES.
THE DEGREE OF ECONOMIC
INTEGRATION
• Preferential Trade Arrangements : Reduction of intragroup tarrifs
• Free Trade Area : Removal of intragroup tarriffs
• Custom Union : Common external tarriffs
• Common Market : Allowing free movement of labor and capital among
member nations
• Economic Union : Unifying the monetary and fiscal policies of
member states
• Trade Creation
• Trade Diversion
• The Dynamic Benefits of Economic
Integration
THE THEORY OF SECOND BEST
STATIC WELFARE EFFECTS
DTNAMIC BENEFIT
ECONOMIC INTEGRATION AMONG
COUNTRIES
• European Union (EU), comprising 28 European countries
• NAFTA The United States commenced bilateral trade negotiations with Canada more than 30
years ago In 1991, bilateral talks began with Mexico, which Canada joined
• CMEA or COMECON Negotiation with bloc nation communist in Eastern Europe
• CEEC and NIS (after communist regime collapse)
• Developing Countries : CACM,LAFTA,Mercosur,FTAA,CARIFTA,EAC, ASEAN, SADC,
WAEMU