REGIONAL ECONOMIC

INTEGRATION

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 WHAT IS REGIONAL ECONOMIC
INTEGRATION?

Regional Economic Integration (regionalism):

Process whereby countries in a geographic region
cooperate with one another to reduce or eliminate
barriers to the international flow of products,
people, or capital.

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 WHAT IS REGIONAL ECONOMIC
INTEGRATION?
• Levels of Regional Integration
– Free- Trade Area
– Customs Union
– Common Market
– Economic Union
– Political Union

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 Levels of Regional Integration
– Free- Trade Area: Economic integration
whereby countries seek to remove all barriers
to trade between themselves , but each
country determines its own barriers against
nonmembers

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 Levels of Regional Integration
– Customs Union : Economic integration
whereby country remove all barriers to trade
between themselves but erect a common
trade policy against nonmembers

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 Levels of Regional Integration
– Common Market

Economic integration whereby countries remove

all barriers to trade and the movement of labor
and capital between themselves but erect a
common trade policy against nonmembers.

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 Levels of Regional Integration
– Economic Union
Economic integration whereby countries
remove barriers to trade and the movement of
labor and capital, erect a common trade policy
against nonmembers, and coordinate their
economic policies.

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 Levels of Regional Integration
– Political Union
Economic and political integration whereby
countries coordinate aspects of their economic
and political systems.

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 Levels of Regional Integration
Gr
ea
t er Free-Trade Area
in
te
gr Customs Union
a tio
n Common Market

Economic Union

Political Union

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 EFFECTS OF REGIONAL ECONOMIC
INTEGRATION

• Benefits of Regional Integration

• Drawbacks of Regional Integration

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Benefits of Regional Integration
– Trade Creation
– Greater Consensus
– Political Cooperation
– Employment Opportunities

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Benefits of Regional Integration
– Trade Creation
Increase in the level of trade between nations
that results from regional economic
integration.

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Benefits of Regional Integration
– Greater Consensus
• The Benefits of trying to eliminate trade barriers in
smaller groups of countries.
• It can be easier to gain consensus from fewer
members as opposed to.

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Benefits of Regional Integration
– Political Cooperation
• Be political benefits from efforts toward regional
economic Integration.
• A group of nations can have significantly greater
political weight than each nation has individually.

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Benefits of Regional Integration
– Employment Opportunities
• Expand employment opportunities by enabling
people to move from one country to another.
• Simply to earn a higher wage.

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Drawbacks of Regional Integration
– Trade diversion
– Shifts in Employment
– Loss of National Sovereignty

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Drawbacks of Regional Integration
– Trade diversion
Diversion of trade away from nations not
belonging to a trading bloc and toward
member nations

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Drawbacks of Regional Integration
– Shifts in Employment
Industries requiring mostly unskilled labor

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Drawbacks of Regional Integration

– Loss of National Sovereignty

Successive levels of integration require that
nations surrender more of their national
sovereignty

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 INTEGRATION IN EUROPE

• European Union
• European Free Trade Association (EFTA)
• The European Free Trade Association (EFTA) is the intergovernmental
organisation of Iceland, Liechtenstein, Norway and Switzerland. It was set up
in 1960 by its then seven Member States for the promotion of free trade and
economic integration between its members.

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 European Union
– European monetary union
– Enlargement of the European Union
– Structure of the European Union

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 European Union
– European Monetary Union
The European Union that established its own
central bank and currency

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 European Union
– Enlargement of the European Union
1525 (May 2004)
Some certain demands (Copenhagen Criteria):
 Has stable institutions (democracy, law, Human
Rights, Minorities)
 Market Economy
 Is able to assume the obligations of membership
(economic, monetary, political union)
 Adopt the rules and regulations of the community

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 European Union
– Structure of the European Union
• European Parliament
• Council of the European Union
• European Commission
• Court of Justice
• Court of Auditors

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 European Free Trade Association (EFTA)

• European Free Trade Association (EFTA)

The European Free Trade Association (EFTA) is the
intergovernmental organisation of Iceland,
Liechtenstein, Norway and Switzerland. It was set
up in 1960 by its then seven Member States for
the promotion of free trade and economic
integration between its members.

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 INTEGRATION IN THE AMERICAS
• North American Free Trade Agreement (NAFTA)
• Andean Community
• Latin American Integration Association (ALADI)
• Southern Common Market (MERCOSUR)
• Central America and the Caribbean
• Free Trade Area of the Americas (FTAA)
• Transatlantic Economic Partnership (TEP)

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North American Free Trade Agreement
(NAFTA)

– Local Content Requirements and Rules of

Origin.
– Effects of NAFTA
– Expansion of NAFTA

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North American Free Trade Agreement
(NAFTA)

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 Andean Community

Main Objectives:
 Tariff Reduction for Trade
 Common Policies

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 Andean Community
– Latin American Free Trade Association (LAFTA)
Includes 5 South American Countries
 Bolivia
 Colombia
 Ecuador
 Peru
 Venezuela

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Latin American Integration Association
(ALADI)
– Its main objective is the establishment of a
common market, in pursuit of the economic and
social development of the region.
– Its members are: Argentina, Bolivia, Brazil, Cuba,
Chile, Colombia, Ecuador, Mexico, Paraguay,
Peru, Uruguay and Venezuela.

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Southern Common Market (MERCOSUR)

– Customs Union
– Members :
• Argentina
• Brazil
• Paraguay
• Uruguay
• Venezuela

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Southern Common Market
(MERCOSUR)

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Central America and the Caribbean

– Caribbean Community & Common

Market
– Central American Common Market

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Caribbean Community & Common Market
– Members: 15  Haiti
 Antiqua and Barbuda  Jamaica
 Bahamas
 Montserrat
 Barbados
 Belize  Saint Kitts and Nevis
 Dominica  Saint Lucia
 Grenada  Saint Vincent and
 Guyana Grenadines
 Suriname
 Trinidad and Tobago
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Free Trade Area of the Americas (FTAA)
 Anti &  Dominican  Paraguay
Barbuda  Ecuador  Peru
 Argentina  El Salvador  Saint Kitts & Nevis
 Bahamas  Grenada  Saint Lucia
 Barbados  Guatemala  Saint Vincent
 Belize  Guyana  Suriname
 Bolivia  Haiti  Trinidad
 Brazil  Honduras  US
 Canada  Jamaica  Uruguay
 Chile  Mexico  Venezuela
 Colombia  Nicaragua
 Costa Rica  Panama
 Dominica

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Transatlantic Economic Partnership
(TEP)
– The Transatlantic between US and EU

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