Analyse the Various Progression/stages of Economic Integration

INTRODUCTION

As international trade and investment levels continue to rise, the level of economic integration between various groups of nations is also depending. The most obvious example of this is the European Union, which has evolved from a collection of autarkical nations to become fully integrated economic units.

Economic integration is an agreement among countries in a geographic region to reduce and ultimately remove tariff and non-tariff barriers to the free flow of goods or services and factors of production among each other’s; any type of arrangement in which countries agree to coordinate their trade, fiscal, and/or monetary policies are referred to as economic integration. Although it is rare that relationships between countries follow so precise a pattern, formal economic integration takes place in stages beginning with lowering and removal of barriers to trade and culminating in the creation of economic union. These stages are;

• Free trade area

• Customs union

• Single market

• Economic and monetary union

• Complete integration (political union)

FREE TRADE AREA

A free trade area (FTA) is formed when at least two states partially or fully abolish custom tariffs on their inner border. Free trade area is a type of trade bloc, a designated group of countries that have agreed to eliminate tariffs, quotas on most (if not all) goods traded between them. To exclude regional exploitation of zero tariffs within the FTA there is a rule of certificate of origin for the goods originating from the territory of a member state of an FTA. Unlike a customs union, members of a free trade area do not have a common external tariff (with respect to non-members), meaning different quotas and customs. To avoid evasion (through re-exportation) the countries use the system of certification of origin most commonly called rules of origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Goods that don't cover these minimum