Global – Economic Integration Flashcards
What is Economic Integration?
Economic cooperation between countries and coordination of their economic policies leading to increased economic links between them.
What are the Types of Trade Agreements?
1) Preferential
2) Bilateral
3) Regional
4) Multilateral
What are Preferential Trade Agreements?
An agreement between two or more countries to lower trade barriers on particular goods in trade between each other. It results with members of the agreement having easier access to the markets of other members, as opposed to those not in agreement.
Distinguish between Bilateral, Regional and Multilateral Trade Agreeements
Bilateral: between two countries
Multilateral: between many countries
Regional: between countries located within a region
The main objective of all types of agreement is to promote trade liberalization (free trade).
What are Trading Blocs?
Group of countries which has agreed to reduce trade barriers for the purpose of encouraging free trade and cooperation between them.
What are the Different Types of Trading Blocs?
1) Free trade area
2) Customs union
3) Common market
4) Monetary union
What is a Free Trade Area?
Type of trading bloc which consists in a group of countries who decide to gradually eliminate trade barriers between themselves.
What are the Issues related to Free Trade?
Each country has individual barriers for non-member countries therefore external goods can be imported by an FTA country with the lowest barriers and sold between the FTA members with higher barriers. To prevent this, “rules of origin” are used.
What is a Customs Union?
Group of countries which fulfills the requirements of an FTA and additionally adopts a common policy towards non-member countries. All countries also act as a group in negotiations and agreements with non-member countries.
State an Example of an FTA
1) NAFTA (Canada, Mexico, US)
2) SAARC (South Asia)
State an Example of Customs Union
1) CEFTA (Europe Trade Agreement)
2) SACU (South Africa)
3) PARTA (Pacific)
What are the Issues related to Customs Union?
Potential disagreements between countries when negotiating with non-member countries. This can also occur in relation to policy setting and coordination.
What is a Common Market?
Countries which have formed a Custom Union proceed to further eliminate remaining trade barriers between them, they continue to have common external policy, and additionally agree to remove all restrictions on movements of factors of production (e.g. labor and capital).
State an Example of a Common Market
1) EEC (before European Union)
2) CSME (Caribbean)
What are the Issues related to Common Market?
Requires greater coordination among members and willingness to give up authority. Disagreements can arise and a long time is needed to assert policy changes.
