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mccabe hw - 3 Common market no barriers to trade between...

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The degree of economic integration can be categorized into six stages: 1. Preferential trading area 2. Free trade area, Monetary union 3. Customs union, Common market 4. Economic union, Customs and monetary union 5. Economic and monetary union, Fiscal union 6. Complete economic integration These differ in the degree of unification of economic policies, with the highest one being the political union of the states. There are 5 levels of economic integration 1.Free trade area Members determine their own trade policies with regard to nonmembers This is the most popular form of integration Examples include: . the European Free Trade Association (between Norway, Iceland, Liechtenstein, and Switzerland) . the NAFTA 2. Customs union - eliminates trade barriers between member countries and adopts a common external trade policy Most countries that enter a customs union desire further integration in the future Examples include the Andean Pact (between Bolivia, Columbia, Ecuador, Venezuela, and Peru)
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Unformatted text preview: 3. Common market - no barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production This type of integration can be difficult to achieve and requires significant harmony among members in fiscal, monetary, and employment policies 4. Economic union - involves the free flow of products and factors of production 5. Political union - independent states are combined into a single union-This requires that a central political apparatus coordinate economic, social, and foreign policy for member states-The EU is headed toward at least partial political union, and the-US is an example of even closer political union The Case for Regional Integration-There are both economic and political arguments supporting regional economic integration-Generally, many groups within a country oppose the notion of economic integration...
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