This website uses cookies to ensure you have the best experience. Learn more

Different Economic Integration And How Each Affect International Trade

2503 words - 11 pages

Discuss the different economic integration and how each form affects international trade?
Definition of economic integration:
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), it’s economic, social, and political importance has been on the rise in recent centuries. It is the presupposition of international trade that a sufficient level of geopolitical peace and stability are prevailing in order to allow for the peaceful ...view middle of the document...

This is one of the reasons for the global scale development of economic integration, a phenomenon now realized in continental economic blocks such as ASEAN, NAFTA, SACN, the European Union, and the Eurasian Economic Community; and proposed for intercontinental economic blocks, such as the Comprehensive Economic Partnership for East Asia and the Transatlantic Free Trade Area.
As international trade and investment levels continue to rise, the level of economic integration between various groups of nations is also deepening.  The most obvious example of this is the European Union, which has evolved from a collection of autarkical nations to become a fully integrated economic unit.  Although it is rare that relationships between countries follow so precise a pattern, formal economic integration takes place in stages, beginning with the lowering and removal of barriers to trade and culminating in the creation of an economic union.  These stages are summarized below
Types of economic integration and their effect on international trade
The first level of formal economic integration is the establishment of free trade agreements (FTAs) or preferential trade agreements (PTAs).  FTAs eliminate import tariffs as well as import quotas between signatory countries.  These agreements can be limited to a few sectors or can encompass all aspects of international trade.  FTAs can also include formal mechanisms to resolve trade disputes.  The North American Free Trade Agreement (NAFTA) is an example of such an arrangement.
Aside from a commitment to a reciprocal trade liberalization schedule, FTAs place few limitations on member states.  Although FTAs may contain provisions in these areas if the signatory countries agree to do so, no further harmonization of regulations, standards or economic policies is required, nor is the free movement of capital and labor a necessary part of a free trade agreement.  FTA signatory countries also retain independent trade policy with all countries outside the agreement.
However, in order for an FTA to function properly, member countries must establish rules of origin for all third-party goods entering the free trade area.  Goods produced within the free trade area (and subject to the agreement) may cross borders tariff-free, but rules of origin requirements must be met to prove that the good was in fact produced in the exporting country.  In the absence of rules of origin, third-party countries seeking trade access to the FTA area will choose the path of least resistance – the country where they face the lowest opposing tariff – in order to gain effective entry to the entire FTA region.
A customs union (CU) builds on a free trade area by, in addition to removing internal barriers to trade, also requiring participating nations to harmonize their external trade policy.  This includes establishing a common external tariff (CET) and import quotas on products entering the region from...

Other assignments on Different Economic Integration And How Each Affect International Trade

Show How Different Ideological Approaches Have Helped You To Understand The Cultural Significance Of Spaces And Places

2057 words - 9 pages Show how different ideological approaches have helped you to understand the cultural significance of spaces and places. [40 Marks] Places and spaces can communicate a fixed view on the world, positioning audiences to hold the preferred, closed reading that alternative theoretical approaches transmit to their audiences. Ideologies are dominant theories that can be implicit or explicit within places and spaces. Therefore, places and spaces are

Econ251 Essay

438 words - 2 pages 1. Define the term economic integration. What are the different levels of economic integration? How do they differ from each other? An economic arrangement between different regions marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. The aim of economic integration is to reduce costs for both consumers and well as to increase trade between the countries taking part in


3448 words - 14 pages Introduction a) Definition According to wikipedia Economic integration is the unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade taking place among them prior to their integration. According to business dictionary The elimination of tariff and nontariff barriers to the flow of goods, services, and factors of production between a group of nations

Information System

1763 words - 8 pages such international agencies as the World trade organizations(WTO). Therefore, globalization is regarded as the situation where the world become interdependence and interconnected in all aspect that is social, economic, and political as well as technologically. To incur with the question, the notion whether Regional integration compliment or contradict with globalization have been explained by the following Arguments as follows:- Kudor Akira

Regional Trade - South Pacific

5104 words - 21 pages argument for regional economic integration is straightforward: international trade theories envisage that "free trade will allow countries to specialise in the production of goods and services that the can produce most efficiently", resulting in increased world production that would be impossible without free trade (DLGH, 2010, p.271). In light of our objective, we attempted to realize the applicability of economic integration in the

What Constitutes The Basis For Trade? Also What Are The Gains From Trade In Terms Of Production And Consumption?

963 words - 4 pages gives rise to a world economy, in which prices, or supply and demand, are affected by global events. A basic question in the study of international economics is 'why do nations trade?' or in other words, 'what is the basis of international trade?' The basis of all economic activities, including international trade, is essentially the human desire to improve its standards of living, i.e., to consume more and more of superior goods and services. It

Asean Integration

1621 words - 7 pages NAFTA' (1994) 9:3 American University Journal of International Law and Policy 817 [ 4 ]. UREA projects in Indonesia and Malaysia Soda Ash in Thailand, Superphosphate Fertilizer in the Philippines, and a Diesel engine project for Singapore. [ 5 ]. Tan, L. H.. (2004). Will Asean Economic Integration Progress beyond a Free Trade Area?. The International and Comparative Law Quarterly, 53(4), 935–967. Retrieved from

Agadir Agreement

3847 words - 16 pages , Tunisia, Egypt and Jordan, which had already launched structural adjustment and economic liberalization programs. At the end of the 1990s, all of these countries had concluded bilateral FTAs with each other to accelerate the relatively slow-moving ten-year Pan-Arab trade liberalization program. From a global point of view, however, these economies were too small to realize considerable bilateral trade potential; reciprocal provisions proved

Can Innovation Solve The Economic Crisis?

2477 words - 10 pages to solve the economic crisis. Global Efforts Apart from the supranational union’s coordination efforts on innovation, a global effort for international coordination is required as well. The global crisis has resulted international trade, access to international financing and foreign direct investment to plummet and affect the global value chains which is an essential source for innovation (OECD 2009). Global value chains afford companies the

Globlisation Of Economy

1437 words - 6 pages globalization has been driven by policies that have opened economies domestically and internationally. In the years since the Second World War, and especially during the past two decades, many governments have adopted free-market economic systems, vastly increasing their own productive potential and creating myriad new opportunities for international trade and investment. Governments also have negotiated dramatic reductions in barriers to commerce and

Kazakhstan's Economy In Global Market

3331 words - 14 pages economy (World Trade Organization, International Monetary Funds, The World Bank, European Union…). Efforts were made to get the financial markets integrated between each other as we have indexes for the whole world such as BBC Global 30, S&P global 100 … etc. and indexes for the European union like FTSE Euro 100, FTSE Euro Top 100… etc. The independence allowed Kazakhstan to establish economic relations with many developed and developing

Similar Documents

International Trade And Finance Speach Essay

357 words - 2 pages Exports: Chrysler, Ford and GM are the top automotive manufacturers in America. When the top three automobile manufacturers began to see a decline in their sales, shortly afterwards it lead to a trade deficit and soon after that a drop in employment (Thompson, 2010). When America cannot sell goods to other countries this causes a surplus of domestic goods. In the case of automobiles if there is a surplus there production will slow and

International Trade And Finance Speech Eco 372

1402 words - 6 pages friendliness and its ability to hold large amounts of data without sacrificing performance. Microsoft Access functions in different ways that tie together …what? . Tables are used to store data from which queries can pull information from and perform calculations against the data. Forms can be used to enter information into tables. Reports will allow the information to be displayed in a printer-ready format. The reports can also be exported

Economic And Trade Relations Of Japan And China

1889 words - 8 pages and took control of Taiwan. China still holds a grudge over this bad memory. China recognizes that Japan is allied with the U.S. in containing China, and that Japan is a source of Western ideas, development, economic aid, investment, and technology. In many ways, China and Japan, fear each other, and recognize the need to respect each other to flourish in the world today (Kee, 2005). The progress of a free trade agreement has been evolving for

A Research Study Of How Wrong Eating Habits Can Affect The Academic Performance Of Hotel And Restaurant Management Students

2882 words - 12 pages ------------------------------------------------- A Research Study of How Wrong Eating Habits Can Affect the Academic Performance of Hotel and Restaurant Management Students A Research Study Presented to: Ms. Nelia Albite Hotel and Restaurant Department Mindanao Polytechnic College ------------------------------------------------- General Santos City In Partial Fulfillment On the Requirement of the Course