REGIONAL ECONOMIC AND POLITICAL

INTEGRATION

Lorena Montoro

Begoña Cortés

Maria del Carmen Ebang

Alexandra Posso

4. DETERMINANTS OF ECONOMIC AND POLITICAL INTEGRATION.

4.1 Common culture

4.2 History of Common Economic and Political Dominance

4.3 Regional proximity

4.3 Economic considerations

4.4 Political considerations

5. LEVELS OF REGIONAL ECONOMIC AND POLITICAL INTEGRATION AND

EXAMPLES OF INTEGRATION SUCCESSES

5.1 Bilateral agreements and Multilateral Forums and Agreements

5.2 Free Trade Agreements

5.3 Customs Unions

5.4 Common Markets

5.5 Monetary Unions

5.6 Political Unions.

INDEX:

● Regional Economic Integration refers to agreement between groups of countries in geographic

region to reduce and ultimately remove tariff and non tarif barriers to the free flow of goods,

services and factors of production between each other countries.

● A political integration refer to cooperation between states and formations of state-based

regimes.The deeper forms of integration refer to the constitution of new political entities , which

have a certain degree of independence in regard to the individual states.

Introduction

● A Common Culture

● A History of Common Economic and Political Dominance

● Regional Proximity

● Economic Considerations

● Political Considerations

Determinants of economic and political integration

A common culture was fostered by a former colonial power , people in

neighboring countries often share a language , as well as other cultural

elements , such as traditions , norms and religion.

The commonality of language and promote cooperation :In a economic

relationship in which culture does not constitute a barrier to communication .

A Common Culture

A history of a dominance by one nation in a region often leads to shared

cultural elements among the different peoples in that region as well as to

similar economic and political structures .

● From a marketer’s point of view this similarities make possible a

standardized approach to the market .

● From the country perspective , this integration is facilitated by

similarity of economic structures established by a former colonial

power and the shared language and culture.

A History of Common Economic and Political

Dominance

Countries doesn’t need to have

a common border to engage in

cooperative agreements ,

access that is facilitated by

direct and effective

transportation and

communication systems that

increases the economic

relationship.

Regional Proximity

Countries of similar development levels are likely to create a successful

common market that assures a preferential treatment for goods manufactured

in the region and also securing a substantial local consumer market.

The EU is a successful primary due to economic commonalities shared by

member countries .

● A highly developed industrial base and overall productivity

● An extensive transportation and telecommunications infrastructure

● Prosperous consumers who can afford to purchase the goods and services

of local firms

Economic Considerations

One of the main obstacles to regional economic and political integration is the

threat of losing national identity and sovereignty as part of the larger regional

structure .

A successful regional economic and political integration is one that promises

a more substantial and more rapid economic development for member

countries that they would otherwise experience in insolation from the

country group and one equitability addresses and protects regional as well as

national economic and political interest.

Political Considerations

LEVELS OF REGIONAL ECONOMIC AND POLITICAL

INTEGRATION AND EXAMPLES OF INTEGRATION

SUCCESSES

POLITICAL

UNION

MONETARY

UNION

COMMON MARKET

FREE TRADE AGREEMENT

GENERAL BILATERAL/MULTILATERAL

AGRREMENT

These are different

stages to research

political union...

...but not always all

countries reach the

political union

BILATERAL AGREEMENTS AND MULTILATERAL

FORUMS AND AGREEMENTS

Bilateral and multilateral agreements can be industry specific or products

exchanged between countries.

Agreements for a particular industry are made we different Goverments

use same agreements for a particular sector, reducing this way additional

taxes.

This started this economic integration through European Coal and Steel

Community in the fifties, and its resulting structure, the European Atomic

Energy Community.

DIFFERENCES BILATERAL/MULTILATERAL

AGREEMENTS

● If these agreements are limited for two countries we are talking about.

bilateral agreements.

play a formal regional integration.

● While multilateral forums and agreements involve multiples countries.

provide numerous regional cooperations.

A free trade agreement takes places between two or more countries and

involves a reduction in, or even elimination of, customs duties and other trade

barriers on all goods and services traded between the member countries.

Countries are free to charge their own tariffs to all entities external to the free

trade market.

FREE TRADE AGREEMENTS

•Countries reduce or eliminate trade

barriers on all goods and services

traded between them.

★ European Free Trade

Association. (EFTA)

-Member countries: Iceland,

Liechtenstein, Norway, and

Switzerland.

THE EUROPEAN FREE TRADE ASSOCIATION

SwitzerlandLiechtenstein

Iceland

Norway

★ Central European Free Trade

Agreement. (CEFTA)

-Member countries: Hungary, the Czech

Republic, Slovakia, and Poland.

-The more developed countries of the

former Soviet Bloc, adopting policies to

facilitate adherence to the European

Union.

THE EUROPEAN FREE TRADE ASSOCIATION

Member countries are attempting to

reduce tariffs and create an environment

that promotes mutual involvement in the

region.

ASEAN is ultimately to create a free trade

area where tariffs a nontariffs barriers are

eliminated and to provide a substantial

market.

THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS AND

THE ASEAN FREE TRADE AREA

-Member countries: Brunei,

Cambodia, Indonesia, Laos,

Malaysia, Myanmar, the Philippines,

Singapore, Thailand, and Vietnam

NAFTA was eliminated all tariff and

nontariff barriers, such as import licenses

and quotas, between the members

countries.

One of the more important decisions for

NAFTA involves the rules of origin: To

benefit from a duty free status, goods must

have a 60 percent North American content.

-Member countries: Unites States, Canada,

and Mexico

THE NORTH AMERICAN TRADE AGREEMENT

ADVANTAGES FREE TRADE AGREEMENTS DISADVANTAGES

VIDEO

Central American Free Trade Agreement was signed in 2004 between the

United States, the five countries of Central American.

● Costa Rica

● El Salvador

● Guatemala

● Honduras

● Nicaragua

● Dominican Republic

CENTRAL AMERICAN FREE TRADE AGREEMENT-

Dominican Republic

A plan to create a free trade association by 2005 that would comprise all

member countries of 34 democratic nations American

THE FREE TRADE AREA OF THE

AMERICANS

A free trade organization that promotes ec cooperation among a coalition of 14

of Africa’s more affluent and developed nation,designed to foster increased

economic and governmental stability through the use of collective

peacekeeping forces.

The 14 countries are:

Lesotho,Malawi,Mauritius,Mozambique,Namibia,South Africa,swaziland,United

Republic of Tanzania,Zambia and Zimbabwe.

THE SOUTHERN AFRICAN DEVELOPMENT

COMMUNITY

❖ Trade association that eliminates or greatly reduces all trade restrictions

for member countries and also adopts common external tariffs on products

imported from outside the area.

❖ A customs Union includes:

● Botswana

● Swaziland

● Lesotho

● Namibia

CUSTOMS UNION

What is Common Markets?

It was a free market agreement among countries,in which the objective was to

reduce the tariffs and facilitated their free market in general.

Exemple: Mercosur

COMMON MARKETS

● It wa a bilateral and unilateral agreement which was established to reduce

tariffs barriers(LAIA).

● The countries LAIA:

Brasil,colombia,Bolivia,México

Chile,Ecuador,Paraguay,Uruguay,

Argentina,Venezuela,Perú.

THE LATIN AMERICAN INTEGRATION

ASSOCIATION

The Andean countries are:

● Bolivia

● Colombia

● Ecuador

● Peru

The objectives were:

● Maximise their economy

● to facilitate the free market

● unify their countries

● increase the trade

THE ANDEAN COMMON MARKET

It was a free trade agreement between the South American countries.

This agreement was formed between:

● Argentina

● Chile

● Paraguay

● Uruguay

● Venezuela.

THE SOUTHERN CONE COMMON MARKET

It was economic agreement between the central american countries,in which

the objective was to create a unity regional economic similar to the European

Union own.

CENTRAL AMERICAN COMMON THE

MARKET

Agreement between 19 members countries with the objective to integrate the

economic eliminating the trades barriers and to adopt a common tariff to

everybody.

The countries that integrate in COMESA are:

● Burundi,Zambia,Zimbabwe

● Comoros,Sudan,Switzerland,Uganda

● Democratic Republic of Congo,Seychelles

● Djibouti,malawi,Mauritius,Namibia,Rwanda

● Egypt,Eritrea,Ethiopia,Kenya,Madagascar.

THE COMMON MARKET FOR EASTERN

AND SOUTHERN AFRICA

Involves:

● A common monetary policy.

● The creation of a unified central bank.

● The use of a single currency.

Examples of successful monetary unions:

● European Monetary Union.

● West African Economic and Monetary Union.

● Economic Community of West African States.

THE EUROPEAN ECONOMIC AND MONETARY UNION

(EMU)

● EMU is agreed in the Treaty of Maastricht.

● The European Central Bank is created and complete the single market.

● Between 1999 and 2002 twelve member states withdraw their circulation coins and put the euro.

● All member states are part of the EMU, but only 17 are the "eurozone", either because, they chose not to use the single currency, or because they have to meet convergence criteria.

The EMU had three stages:

● involved the free movement of all capital in the EU.

● The abolition of all exchange controls.

● The creation of structural funds to remove inequalities between

countries.

THE EUROPEAN ECONOMIC AND MONETARY UNION (EMU)

❏ Convergence of economic policies.

❏ Establishing the European Monetary Institute

(EMI).

❏ Independence of national central banks.

❏ Establishing rules to curb budget deficits.

★ Euroland:Austria,Belgium,Finland,France,

Germany,Ireland,Italy,Luxembourg,the

Netherlands, Portugal and Spain adopted the

euro, with Greece joining in 2001 and Slovenia

2007 .

Each EU country must meet the following criteria:

● Price stability.

● Inflation in check.

● Interest rates varying no more than 2 percent from average interest

rates.

● Public debt can not exceed 60% of gross domestic product.

● The national deficit can not exceed 3% of GDP.

STABILITY AND GROWTH PACT (SGP)

● Single currency- the CFA franc.

● Modest Trade.

● Member countries are: Benin, Burkina Faso, Ivory Coast,Guinea-Bissau,

Mali, Niger, Senegal, and Togo.

THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS).

● Member countries are: the aforementioned (WAEMU) and Cape

Verde,Gambia,Ghana,Guinea ,Liberia, Nigeria and Sierra Leone.

● These past six members have set up a monetary union and have

committed to adopting common currency and they have pledged to

meet stringent convergence criteria:

❖ 5 % inflation.

❖ The national deficit can not exceed 4% of GDP.

❖ Central bank financing of the budget deficit limited to 10% of previous

year´s tax revenue.

THE WEST AFRICAN ECONOMIC AND MONETARY UNION (WAEMU)

● The highest level of regional integration; it assumes a viable economic

integration and involves the establishment of viable common governing

POLITICAL UNION

bodies, legislative bodies,and enforcement

powers.

● The European Union is the only example to

date of successful voluntary political

integration.

● 28 member states:

Germany, France, Italy, the Netherlands,Belgium,

Luxembourg,Denmark,Ireland, United

Kingdom,Greece, Spain, Portugal,Austria,

Finland,Sweden, Czech Republic, Cyprus,Estonia,

Latvia, Lithuania, Hungary,Malta, Poland,

Slovenia, Slovkia, Bulgaria,Romania and Croatia

EUROPEAN PARLIAMENT

BRUSSELS

STRASBOURG

LUXEMBOURG

PRESIDENT MARTIN

SCHULZADVISORY COMMITTEE 766 MEP´s

PURPOSE

● Approve EU legislation by Ordinary and Special process.

● Ratify international agreements.

● Approve annual budget.

● Exercise control over the Commission, the Council of the

EU, the European Council, the Court of Justice, ECB,

ECA, (has the power to censure motion on the

Commission.

WHO?

President: Martin Schulz.

14 VICE

766 MEPs Grouped by Political Parties.

HOW?

Vote by vote by secret and Direct Universal.

Lisbon Treaty: A country can not have less than 6 or more than 96 MEPs.

WHEN?

Every 5 years celebrating the European Parliament Elections.

HOW IS IT COMPOSED?

EUROPEAN COMMISSION

BRUSSELS PRESIDENT: JOSE MANUEL

DURAO BARROSO

28 COMMISSIONERS

PURPOSE

● Legislative initiative proposed laws to Parliament and Council.

● Manage and allocate budgetary funds.

● Ensure the implementation of the Law.

● International EU representation.

HOW IS IT COMPOSED?

WHO?

President: Jose Manuel Barroso Durao.

28 Commissioners for each member one country

UE.

HOW?

Single European Council President.

Single European Council President and

Commissioners.

Approval of election by the European

Parliament.

WHEN?

Every 5 years Commission Appoints new.

EUROPEAN CENTRAL BANK

FRANCFORT MARIO DRAGHI

Governing Council and General

Council

● PURPOSE

● Keep prices stable.

● Maintain a stable financial system.

● Set interest rates.

● Manage foreign exchange reserves.

● License ticketing.

● Monitoring changes in prices.

WHO?

EXECUTIVE COMMITTEE:

1 President Mario Draghi.

1 Vice.

4 members appointed by the eurozone countries.

GOVERNING COUNCIL:

Executive Committee

Governors of the 17 national central banks

GENERAL COUNCIL

President, Vice President and Governors of the 28 EU countries.

HOW?

The ECB is independent.

WHEN?

Governors of a Central Bank 5 years.

Committee members ECB executive 8 years.

Cese lack of capacity or serious offense.

HOW IS UP?