8/8/2019 Economic Integration 1
1/18
23/11/2009 1
8/8/2019 Economic Integration 1
2/18
Trade Agreements
Free Trade Area
Customs Union Common Market
Economic Union
Political Integration
23/11/2009 2
8/8/2019 Economic Integration 1
3/18
Nations make an agreement for trade in one
or multiple set of commodities
Initiated for the common advantage ofmember countries.
Eg.ECSC
23/11/2009 3
8/8/2019 Economic Integration 1
4/18
Bankok Agreement Global System of Trade Preferences (GSTP) SAARC Preferential Trading Agreement (SAPTA)
India-Sri Lanka FTA India -Thailand FTA India Singapore Comprehensive Economic Cooperation
(CECA) Indo-Nepal Trade Treaty
India-Mauritius PTA India-Chile PTA
23/11/2009 4
8/8/2019 Economic Integration 1
5/18
Gulf Cooperation Council (GCC) China South Korea
Japan Malaysia Pakistan Southern African Customs Union (SACU) Egypt
Israel Russia Australia
23/11/2009 5
8/8/2019 Economic Integration 1
6/18
Indo-ASEANCECA
South Asian Free Trade Agreement (SAFTA)
BIMSTEC (Bay ofBengal Initiative for Multi-Sectoral Technical & Economic Cooperation)
India - MERCOSUR PTA
23/11/2009 6
8/8/2019 Economic Integration 1
7/18
Tariifs among the member countries will be
abolished, but each member maintains its
own external tariffs againstNon-membercountries.
As against Trade Agreements, FTA include alarge number of commodities
NAFTA, SAFTA, ANCERTA are examples ofFTA
23/11/2009 7
8/8/2019 Economic Integration 1
8/18
The member countries not only abolish all
internal tariffs but formulate a common
policy external tariff. Eg.Andean Pact
23/11/2009 8
8/8/2019 Economic Integration 1
9/18
It abolishes the restrictions on mobility of
factors of production in addition to the
common tariff structure Eg.CARICOM
23/11/2009 9
8/8/2019 Economic Integration 1
10/18
It is a common market in which the macro-
economic and regulatory policies are
harmonized. It is the highest form of economic integration
Eg.European Union
23/11/2009 10
8/8/2019 Economic Integration 1
11/18
It aims at having a single political authority
The European Union is moving in this
direction.
23/11/2009 11
8/8/2019 Economic Integration 1
12/18
Trade Creation and Trade diversion
Economies of Scale
Effect on competition Improved Terms of Trade
Effect on Investment
Effect on Capital Mobility
Effect on Fiscal and Monetary Policies
23/11/2009 12
8/8/2019 Economic Integration 1
13/18
The European Coal and Steel Community
(ECSC) was formed on July 25th, 1952. among
Belgium, France, West Germany, Italy,Luxemburg, andNetherlands for the free
export and import of steel and coal amongthe six nations.
23/11/2009 13
8/8/2019 Economic Integration 1
14/18
There is an agreement between Australia and
New Zealand ( AustraliaNew Zealand Closer
Economic Relations Trade Agreement) forthe removal of all tariff and non-tariff
restraints on all traded goods and services,harmonization of standards and conformance
procedures, freedom from anti-dumpingpenalties, and agreement not to distort bi-
lateral trade with subsidies.
23/11/2009 14
8/8/2019 Economic Integration 1
15/18
There is an agreement among USA, Canada andMexico (NAFTA -North American Free Tradeagreement) for removal barriers in agricultural export,
removal of export subsidies, right for investors toreceive national treatment and rights to have anti-dumping penalties reviewed.
The South Asian Free Trade Area (SAFTA) agreement
was made in January 2004, among SAARC countriesnamely, India,Nepal, Pakistan, Bangladesh, Bhutanand Maldives to have zero customs duty for trade inany commodity among the member nations by 2012.
23/11/2009 15
8/8/2019 Economic Integration 1
16/18
As per the Andean Pact between Bolivia ,
Ecuador, Peru, Columbia and Venezuela ,
these countries maintain a common tariffpolicy towards external countries.
23/11/2009 16
8/8/2019 Economic Integration 1
17/18
The Caribbean Community and Common
Market (CARICOM) is aimed at creating a
common market by integrating membereconomies, co-coordinating the foreign
policies and increasing functionalcooperation in areas of social and human
development.
23/11/2009 17
8/8/2019 Economic Integration 1
18/18
23/11/2009 18