Regional Integration For and Against Articles MGT/448
Regional Integration For and Against ArticlesRegional economic integration is defined as agreements among countries in a geographic region to reduce, and ultimately remove, tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other (Hill, 2009, p. 276). In addition, the term refers to any type of arrangement in which countries agree to coordinate trade, fiscal or monetary policies.
In August of 1992 the talks between the governments of the United States, Canada and Mexico resulted in a North American Free Trade Agreement (NAFTA); the agreement, which eliminated all tariffs on bilateral trade between the three countries, became law on January 1, 1994. Under the NAFTA, all non-tariff barriers to trade between the United States, Canada and Mexico were eliminated; many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008 (U.S. Customs and Border Patrol, 2008).
Several levels of regional economic integration exist such as a free trade area which has no barriers for the trade of goods among member countries; a customs union which is a free trade area that includes a common external trade policy; a common market which is a customs union that allows production to move between members; an economic union which is a common market that requires a common currency, tax rate, and monetary and fiscal policies; and finally, a full political union which is an economic union that includes a central political unit to coordinate the economic, social and foreign policy of member states. (p. 277 - 278).
Advantages of Regional IntegrationRegional economic integration has both supporters and critics. Supporters feel that regional integration allows disadvantaged countries to realize economies of scale,