Foda

5.1.1 Levels of economic integration
There are five major levels of economic integration which are explained in your textbook (Hill, 2005, pp. 269-270). They are listed in order from least integrated to most integrated, and their principal features are detailed in Table 5.1. It would be a good idea to read the textbook as you register the detail of Table 5.1
In your text
Hill 2005, Chapter 8,pp. 267-270.
Table 5.1 Level of economic integration
|Type (Level) |Example |Membership |Principal features |
|Free Trade Area |North American Free Trade |United States |No internal tariffs. |
| |Agreement (NAFTA) |Canada |Each countrydetermines its own trade |
| |Closer Economic Relations |Mexico |policies toward non-members. |
| |(CER) |Australia | |
| | |New Zealand | |
|CustomsUnion |Andean Pact |Bolivia |As for FTA above. |
| | |Colombia |Common external tariff on goods |
| | |Ecuador |imported from outside. |
| ||Peru | |
|Common Market |European Community (EC) |12 European countries.|As for customs union above. |
| |before January 1994. There | |Labour and capital free to move. |
| |has not been another. ||No restrictions on migration. |
|Economic Union |European Union (EU) as from|25 European countries.|As for common market above. |
| |January 1999. | |Common currency - European Monetary |
| | | |Unit (called the 'Euro')|
| | | | |
|Political Union |EU has some elements; see |25 European countries,|European parliament, directly elected |
| |previous level. The |but may include 28 |by citizens of EU countries. |
||ultimate aim is a United |countries by 2007. |Council of Ministers: government |
| |States of Europe. | |ministers for each EU country. |
| | | |An administrative bureaucracy. |
| | ||Court of Justice: the official |
| | | |interpreter of EU law. |

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Levels of Economic Integration

There are about five additive levels of economic integration:
• Free trade. Tariffs betweenmembers are abolished or significantly reduced. A tariff is a tax imposed on imported goods. Each member keeps its own tariffs in regard of third parties. The general goal is to develop economies of scale and comparative advantages.
• Custom union. Sets common external tariffs among members, implying that the same tariffs are applied to third parties. Custom unions are particularly useful to...