Describe the concept of regional economic integration 2

1) Regional Economic Integration can be best defined as an agreement between groups of countries in a geographic region, to reducd and ultimately remove tariff and non-tariff barriers to the free flow of goods, services and factors of production between each other.

2) Common level of regional economic integration are:-

a) Free trade

Free trade is a policy bu which a government does not discriminate against imports or interfere with exports by applying tarrifs on imports and subsidies on exports.

b) Custom Union

A custom union is a type of trade bloc which is composed of a free trade area with a common external tariff.

c) Common market

A common market is an extension of the customs union concept, with the additional feature that it provides for the free movement of labour and capital among the members

d) Economic union

An economic union is a type of trade bloc which is composed of a common market with customs union.

e) Political union

Political integration means that a supranational government taxes all citizens in order to finance its expenditures.

3) Advantages of regional free trade agreements:-

It drives economic growth, enhanced efficiency, increased innovation, and the greater fairness that accompanies a rule-based system. It gives access to higher-quality, lower-priced goods

Disadvantages of free trade:-

It is a threat to intellectual property and leads to deplorable working conditions, jobs loss, economic damage.

4) NAFTA

The North American Free Trade Agreement was an agreement signed by Canada, Mexico and the United States that created a trilateral trade bloc in North America.

Background of NAFTA:-

North American Free Trade Agreement was inspired by the success of the European Economic Community in eliminating tariffs in order to stimulate trade among its members. NAFTA was ratified by three countries' national legislature in 1993 and went into effect on January 1, 1994.