Level of Economic Integration

Level of Economic Integration

1. Preferential Trading Agreement

   • It is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely
     • Economic Cooperation Organization (ECO) Latin American Integration Association (LAIA) Protocol onTrade Negotiation (PTN)

2. Free Trade Agreement

   • Tariffs between member countries are significantly reduced, some abolished altogether. Each member country keeps its own tariffs in regard to third countries.
     • EFTA: European Free Trade Association SAFTA: South Asia Free Trade Area PAcific Alliance

3. Custom Union

   • Sets common external tariffs among member countries, implying that the same tariffs are applied to third countries; a common trade regime is acheved.
     • European Union Custom Andean Community Caribean Community

4. Common Market

   • Services and capital are free to move within member countries, expanding scale economies and comparative advantages. However, each national market has its own regulations such as product standards.
     • Mercosur, East Common Market, West African Common Market

5. Economic Union

   • All tariffs are removed for trade between member countries, creating an uniform market. Monetary and fiscal policities between countries are armonized. (common currency is used).
     • European Union (EU) CARICOM single market and Economi (CSME) Central Ameriacn Common MArket

6. Political Union

   • Represents the potencially most advanced form of integration with a common government, were the sovereignty of member country is significantly reduced.
     • Polish -Lithuanian Union Peru-Bolivian Union United Arab Republic