1. ECONOMIC INTEGRATION Subtitle

2. TITLE AND CONTENT LAYOUT WITH LIST Add your first bullet point here Add your second bullet point here Add your third bullet point here

3. LEARNING OBJECTIVES

4. ECONOMIC INTEGRATION Trade unification between nations who reduce or abolish tariffs on trade taking place in the nation’s borders. Leads to lower prices for producers and consumers as no customs duties are paid in the trading area. Purpose is to encourage trade.

5. TRADE AGREEMENTS Contract/pact/agreement between two or more nations that outlines how they will work together for mutual benefit in investment and trade. Can be regional involving a few nations or districts. Bilateral – involve 2 countries Multilateral – involve a more than 2 countries

6. TRADE BLOC – INTERGOVERNMENTAL AGREEMENT WHERE TRADE BARRIERS ARE REDUCED OR ELIMINATED AMONG PARTICIPATING STATES.

7. FREE TRADE AREAS Group of nations eliminate trade barriers They are free to trade with nations outside of the trade area. NAFTA, ASEAN

8. CUSTOMS UNION Agreement among countries to have free trade and to adopt common external trade barriers against other countries who want to export to them. EU, Eastern African Community, MERCOSUR

9. Common Market Custom Union with common policies on the product regulation, movement of goods and services as well as capital and labor. European Union Common Markets are also customs unions Economic and Monetary Unions Common market Also share a common currency Euro

10. WHY A COMMON CURRENCY? Eliminates exchange rate risk Reduces transaction costs Easy price comparisons among nations Attractive to foreign investment because of the above PLUS one single large currency and trading area. But....single countries cannot set interest rates or valuations and there is a large out of pocket cost to convert to a single currency.

11. COMPLETE ECONOMIC INTEGRATION INDIVIDUAL NATIONS HAVE NO CONTROL OVER ECONOMIC POLICY FULL MONETARY UNION COMPLETE INTEGRATION OF MONETARY POLICY

12. BENEFITS SIZE OF MARKET MORE EXPORTS GREATER EFFICIENCY MORE CHOICE LOWER CONSUMER PRICES INCREASED FOREIGN INVESTMENT GREATER POLITICAL STABILITY BUT….CAN BE DISCRIMINATORY AGAINST NON MEMBERS LOSS OF ECONOMIC AND POLITICAL SOVEREIGNTY

13. IMPACT OF TRADE TARIFFS