Regional Economic Integration

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Reporter: Refurzado, Jinky P. BSA 2-10 REGIONAL ECONOMIC INTEGRATION Regional economic integration, refers to the growing economic interdependence that results when countries within a geographic region form an alliance aimed at reducing barriers to trade and investment. Economic bloc- a geographic area that consists of two or more countries that agree to pursue economic integration by reducing tariffs and other restrictions to cross-border flow of products, services, capital, and, in more advanced stages, labor. Levels Preferential Trade Agreement (PTA) A preferential Trade Agreement is perhaps the weakest form of economic integration. In PTA, countries would offer tariff reductions, though perhaps not elimination, to set of partner countries in some product categories. Free Trade Area This is the simplest and most common arrangement, in which member countries agree to gradually eliminate formal barriers to trade in products and services within the bloc, while each member country maintains an independent international trade policy with countries outside the bloc. E.g., NAFTA. Customs Union Customs Union is similar to a free trade area except that the member states harmonize their trade policies toward nonmember countries --common tariff and nontariff barriers on imports from nonmember countries. E.g., MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay) Common Market Common market (single market) - trade barriers are reduced or removed, common external barriers are established and products, services, and factors of production such as capital, labor, and technology are allowed to move freely among the member countries. Common trade policy with nonmember countries. E.g., the EU. Common market challenges: • Require substantial cooperation from the member countries on labor and economic policies. • As labor and capital can flow
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