Question

The textbook discusses multiple forms of integration at world-regional scales. Please clarify the differences between: trade agreement, customs union, economic union, supranational political union. Please provide an example of each.

Answer 1

Trade agreement is also known as trade pact . This is a wide ranging taxes,tariffs and trade treaty . This often includes guarantees regarding investments . The most common trade agreements are preferential and free trade types and these are set to reduce tariffs , quotas , other trade restrictions on items traded between the signatories . This is set, when two or more countries agrees on certain terms of trade between them . There are bilateral and multilateral trade agreements . Multilateral set agreement between several countries ,such as,WTO,EU,NAFTA . While, bilateral set agreement between two countries , such as, Canada-Peru,EU-South Africa .

Customs union includes a free trade area with some sort of common external tariff . This is established through trade pacts where the participant regions formulate a common external trade policy . The main objective behind setting up custom union is improving the economic efficiency and bringing a close connection of culture and politics . example:EU

Economic union is an agreement between countries which creates a passage of free flowing goods,services,money and workers . They will coordinate in social and financial policies in order to support this common market . The difference between Custom union and Economic Union is that , custom union will not allow the free flow of workers or sharing of currency . example:EU

Supranational political union is a multinational political union where negotiated power is assigned to an authority ,which is decided by the governments of member countries . The European union and World Trade Organizations are both Supranational political unions .