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Types of integration

Political integration  

As the economies of the co-operating countries become completely integrated into a single market, there appears a need for common policies in social policy (education, health care, unemployment benefits and pensions) and common political institutions. This is political integration and its culmination occurs when the co-operating countries are so integrated that they share the same foreign policies and merge their armies. In effect, they form a new country. (“Extension: What is Regional Integration? - EU Learning”)

• Economic integration

Economic integration is the process by which different countries agree to remove trade barriers between them. Trade barriers can be tariffs (taxes imposed on imports to a country), quotas (a limit to the amount of a product that can be imported) and border restrictions

There are four main types of regional economic integration.

1. Free trade area. This is the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. For example, Canada, Mexico and the United States have formed the North American Free Trade Agreement (NAFTA), which reduces trade barriers between the three countries. On the integration scale NAFTA, would be at about 2 since Canada, the U.S. and Mexico are still free to set their own trade barriers on goods from other countries. (“Caribbean Elections - Understanding Regional Integration”)

2. Customs union. This type provides for economic cooperation as in a free-trade zone. Barriers to trade are removed between member countries. The primary difference from the free trade area is that members agree to treat trade with nonmember countries in a similar manner. The Gulf Cooperation Council (GCC) is an example.

3. The single market is the midpoint of the integration scale between political and economic integration. It is the point at which the economies of the co-operating states become so integrated that all barriers to the movements of labour, goods and capital are removed. Like customs unions, there is a common trade policy for trade with nonmember nations. The primary advantage to workers is that they no longer need a visa or work permit to work in another member country of a common market. An example is the Common Market for Eastern and Southern Africa (COMESA).

4. Economic union. This type is created when countries enter into an economic agreement to remove barriers to trade and adopt common economic policies. A further step in the process of economic integration might be adoption of a common currency, with monetary policy regulated by a single central bank.An example is the European Union (EU).