Various Regional Trading Zones

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Introduction

Integration is a political and economic agreement among countries that gives preference to member countries to the agreement. There are economic and well as political reasons why nations pursue economic integration. The economic rationale for the increase of trade between members states of economic unions that it is meant to lead to higher productivity. This is one of the reasons for the global scale development of economic integration, a phenomenon now realized in continental economic blocks such as ASEAN, NAFTA, SACN, the European Union, and the Eurasian Economic Community; and proposed for intercontinental economic blocks, such as the Comprehensive Economic Partnership for East Asia and the Transatlantic Free Trade Area.

Comparative advantage refers to the ability of a person or a country to produce a particular good or service at a lower marginal and opportunity cost over another. Comparative advantage was first described by David Ricardo who explained it in his 1817 book On the Principles of Political Economy and Taxation in an example involving England and Portugal. In Portugal it is possible to produce both wine and cloth with less labor than it would take to produce the same quantities in England. However the relative costs of producing those two goods are different in the two countries. In England it is very hard to produce wine, and only moderately difficult to produce cloth. In Portugal both are easy to produce. Therefore while it is cheaper to produce cloth in Portugal than England, it is cheaper still for Portugal to produce excess wine, and trade that for English cloth. Conversely England benefits from this trade because its cost for producing cloth has not changed but it can now get wine at a lower price, closer to the cost of cloth. The conclusion drawn is that each country can gain by specializing in the good where it has comparative advantage, and trading that good for the other.

Economies of scale refer to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. Economies of scale are a long run concept and refer to reductions in unit cost as the size of a facility and the usage levels of other inputs increase. Economies of scale is also a justification for economic integration, since some economies of scale may require a larger market than is possible within a particular country — for example, it would not be efficient for Liechtenstein to have its own car maker, if they would only sell to their local market. A lone car maker may be profitable, however, if they export cars to global markets in addition to selling to the local market.
Besides these economic reasons, the primary reasons why economic integration has been pursued in practice are largely political. The Zollverein or German Customs Union of 1867 paved the way for German (partial) unification under Prussian leadership in 1871. "Imperial free trade" was (unsuccessfully) proposed in the late 19th century to strengthen the loosening ties within British Empire. The European Economic Community was created to integrate France and Germany's economies to the point that they would find it impossible to go to war with each other.
Objectives:
To profile the World Trade Organization
To identify the major challenges of the World Trade Organization
To discuss the pros and cons of global, bilateral, and regional integration
To describe the static and dynamic impact of trade agreements on trade and investment flows
To define different forms of regional economic integration
To compare and contrast different regional trading groups, including but not exclusively the European Union (EU), the North American Free Trade Agreement (NAFTA), the Southern Common Market (MERCOSUR), and the Association of Southeast Asian Nations (ASEAN)
To describe other forms of global cooperation such as the United Nations and the Organization of the Petroleum Exporting Countries (OPEC)

Economic Integration:
An agreement between or amongst nations within an economic block to reduce and ultimately remove tariff and nontariff barriers to the free flow of products, capital, and labor across the block. Neighboring countries tend to ally with one another because of their proximity, their somewhat similar tastes, the relative ease of establishing channels of distribution, and a willingness to cooperate with one another for the greater benefit of all parties.

Global Integration: Global integration is done through World Trade Organization.

Bilateral integration: In bilateral integration, only two countries economically cooperate with one and other; whereas in regional integration, several countries within the same geographic distance become joint to form organizations such as the European Union (EU) and the North America Free Trade Agreement (NAFTA). Indeed, factors of mobility like capital, technology and labor are indicating strategies for cross-national integration along with those mentioned above.

Regional integration: Regional economic integration is a process in which states enter into a regional agreement in order to enhance regional cooperation through regional institutions and rules.

World Trade Organization 

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on 1 January 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994).

The organization is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on addressing the needs of developing countries. As of June 2012, the future of the Doha Round remains uncertain: the work program lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete. The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sector(requested by developed countries) and the substantiation of the international liberalization of fair trade on agricultural products (requested by developing countries) remain the major obstacles. These points of contention have hindered any progress to launch new WTO negotiations beyond the Doha Development Round. As a result of this impasse, there has been an increasing number of bilateral free trade agreements signed. As of July 2012, there are various negotiation groups in the WTO system for the current agricultural trade negotiation which is in the condition of stalemate.
WTO's current Director-General is Pascal Lamy, who leads a staff of over 600 people in Geneva, Switzerland. Lamy's term ends on 31 August 2013; Roberto Azevêdo has been chosen to replace him.

World Trade Organization Milestones:

1947 Havana, Cuba: 23 countries negotiated major reductions in trade barriers that are codified as the General Agreement on Tariffs and Trade
1947 Geneva, Switz.: 23 members held first official meeting of the founding nations
1949 Annecy, France: 13 members negotiated tariff concessions
1951 Torquay, UK: 38 members negotiated tariff reductions and concessions
1956 Geneva, Switz.: 26 members negotiated tariff reductions and concessions
1960-61 Dillon Round (Geneva, Switz): 26 members negotiated tariff reductions and concessions
1964-67 Kennedy Round (Geneva, Switz): 62 members reviewed new trade rules and passed an anti-dumping agreement
1973-79 Tokyo Round: 102 members reduced customs duties and nontariff barriers
1986-94 Uruguay Round: 123 members expanded negotiations to include trade rules, services, intellectual property, dispute resolution, textiles, and agriculture; World Trade Organization was created
1995: World Trade Organization was formally institutionalized
2001 Doha Development Agenda: 148+ members continue to meet to resolve contentious issues between developed and developing nations
Types of Regional Trade Agreements:
Agreements that primarily address barriers to trade:
Free trade areas: economic blocs in which all barriers to trade, i.e., tariff and nontariff barriers, are abolished amongst member nations, but each member determines its own external trade barriers beyond the bloc
Customs unions: economic blocs in which all barriers to trade, i.e., tariff and nontariff barriers, are abolished amongst member nations, and common external barriers are levied against non-member countries
A more extensive type of regional trade agreement :
common market: an economic bloc which also permits the free flow of capital and labor

Major Types of Economic Integration:
Free trade area—no internal tariffs.
Customs union—no internal tariffs plus common external tariffs.
Common market—customs union plus factor mobility.

Effects of Integration:
Static Effects
Dynamic Effects
Trade Creation
Trade Diversion
Economies of Scale
Increased Competition

General Agreement on Tariffs and Trade 
The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade. According to its preamble, its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was negotiated during the United Nations Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization in 1995.

The original GATT text (GATT 1948) is still in effect under the WTO framework, subject to the modifications of GATT 1994. In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO). The 75 existing GATT members and the European Communities became the founding members of the WTO on 1 January 1995. The other 52 GATT members rejoined the WTO in the following two years (the last being Congo in 1997). Since the founding of the WTO, 21 new non-GATT members have joined and 29 are currently negotiating membership. There are a total of 157 member countries in the WTO, with Russia and Vanuatu being new members as of 2012.

Of the original GATT members, Syria and the SFR Yugoslavia have not rejoined the WTO. Since FR Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations later split in two), is not recognized as a direct SFRY successor state; therefore, its application is considered a new (non-GATT) one. The General Council of WTO, on 4 May 2010, agreed to establish a working party to examine the request of Syria for WTO membership. The contracting parties who founded the WTO ended official agreement of the "GATT 1947" terms on 31 December 1995. Serbia and Montenegro are in the decision stage of the negotiations and are expected to become the newest members of the WTO in 2012 or in near future.

Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to include trade within the service sector and intellectual. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.

The Rise of Bilateral Agreements
According to mainstream economic theory, free trade creates 'welfare gains by allowing consumers and firms to purchase from the cheapest source of supply ensuring that production is located according to comparative advantage.' In other words, free trade allows the operation of the principle of comparative advantage by suppressing the discrimination among the existing sources of supply. Contrarily, by granting preferential market access to its signatory members, ftas shift the discrimination among the existing sources of supply. However, ftas are consistent with the principles of multilateral trade as long as they are trade-creating arrangements and thus welfare enhancing. In fact the welfare potential of an FTA varies directly with its size. The greater the size of an FTA, the greater its welfare-creating potential. Therefore the benefits of free trade coincide with those granted by an FTA when its size coincides with that of the world. In the Americas, the drive for ftas is spearheaded by the United States.

The United States has engaged in a series of negotiations leading to the signing of free trade agreements mostly with developing countries, including several Latin American economies. Since the completion of its first free trade agreement with Israel in 1985, the United States has signed or is in the process of negotiating free trade agreements with 26 countries. The United States has completed free trade agreements with Canada and Mexico (NAFTA, 1994), Jordan (2001), Chile(2004), Singapore (2004), Australia (2005), Morocco (2006), Bahrain (2006), Central America and the Dominican Republic (CAFTA) (2006).The countries with which the United States has pending free trade agreement negotiations include, among others, Panama, Oman, Thailand, United Arab Emirates, Thailand and South Korea. FTA negotiations are also envisaged for the Andean Group (Colombia, Ecuador and Peru).

Main features of the bilateral free trade agreements
The agreements signed and/or negotiated in the twenty-first century are modeled after the Chile-United States FTA. The agreements comprise the standard chapters dealing with trade in goods, in particular agriculture, textiles and apparel, services and investment. The agreements also include chapters on environment and labour. Leaving aside particular issues pertaining to implementation procedures for specific products, the provisions of all the bilateral ftas are, in most cases, very similar, if not identical (as explicitly illustrated by the investment and environment chapters). This section deals with the ftas provisions on trade in goods and services. Investment and environment are addressed separately in the following two sections. All provisions in the free trade agreements are meant to be WTO-plus, that is, they are intended to be an improvement (that is, they have a greater degree of free trade orientation) over the existing multilateral ones.

Trade in goods is governed by the principle of non-discrimination and provides for the phasing out of and elimination of tariffs among the signatory countries. While tariffs are for the most part programmed to be eliminated with the entry into force of the agreements, the text also contemplates the phasing out for selected products over a specified period. The Singapore-United States FTA eliminated most tariffs and contemplated a phase out period of three to 10 years for selected products. In the same vein, following the entry into force of the Australia-United States FTA, duties on 99 per cent of all tariff lines on industrial and consumer goods were suppressed. The Central America Free Trade Agreement (CAFTA) countries have free access to the United States market for 99 per cent of their products due the existing preferential trade arrangements which will be maintained and expanded under the FTA. For its part, the United States will be able to export 80 per cent of its consumer and industrial goods duty free to Central America and the Dominican Republic. Finally, after three years of the entry into force of the United States-Chile FTA, 97 per cent of all Chilean products enter the United States market duty free. The bilateral ftas allow tariff phase-out periods mostly in agriculture. In the case of the Australia-United States FTA, duties are maintained on Australian sugar and dairy products. The CAFTA FTA contemplates different phase-out periods for different products and countries and ranging from the present to 20 years time. In some particular cases, the phase-out period will be provided through the implementation and expansion of existing tariff-rate quotas and safeguards.

Following WTO rules and guidelines, free trade agreements do not allow signatory member countries to apply export subsidies but they permit the imposition of safeguards. In the particular case of CAFTA, chapter 3 of the agreement allows the imposition of a 'transitional agricultural safeguard mechanism' allowing a country to impose a temporary additional duty on specified agricultural products if imports exceed an established volume 'trigger.' That is, safeguards are applied when the imports of given products experience import surges. The safeguard cannot be applied for a period exceeding four years and can be used once during the transition period. Safeguards are also applicable in the case of manufacturing.

As an example, the CAFTA agreement introduced a manufacturing safeguard to protect Central America and the Dominican Republic from import surges. The provisions on services are derived from the WTO GATS and the North America Free Trade Agreement (NAFTA). The provisions include sections and, in some cases, chapters on general measures pertaining to cross border trade in services and specific chapters on financial services, telecommunications and electronic commerce. As well, an important corollary aspect of trade in services is that of the protection of intellectual property rights which apply particularly to entertainment, arts and software. The protection of pharmaceutical data is currently an element in the negotiations of the implementation of the Chile-United States FTA.

Contrarily to WTO legal texts, the services provisions require the granting of national and most favored nation (MFN) treatment (i.e., non-discriminatory treatment) to service suppliers of contracting parties. The WTO GATS texts permit the imposition of 'discriminatory subsidies', however, within the framework of the bilateral FTA, these measures are not allowed once the agreement enters into force. In some cases the bilateral ftas also 'prohibit the parties from requiring firms to establish a local presence as a condition for supplying a service on a cross-border basis.' Finally, they also bar specific types of market access restrictions to the supply of services. According to the general principles of the labour chapters included in the ftas, the signatory parties agree to recognize and protect the labour principles contained in the International Labour Organization (ILO) declaration (1998). The parties recognize and accept each other's right to establish their own laws and to implement fair, equitable and transparent procedures in the enforcement of their own laws.The labour provisions establishes a mechanism for dispute settlement and a labour affairs council to oversee the chapter's implementation and to provide a forum for consultations and cooperation on labour matters.

Regional Economic integration 
Regional economic integration is a process in which states enter into a regional agreement in order to enhance regional cooperation through regional institutions and rules. The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests have been the focus for achieving broader socio-political and security objectives, as defined by national governments. Regional integration has been organized either via supranational institutional structures or through intergovernmental decision-making, or a combination of both.

Past efforts at regional integration have often focused on removing barriers to free trade in the region, increasing the free movement of people, labour, goods, and capital across national borders, reducing the possibility of regional armed conflict (for example, through Confidence and Security-Building Measures), and adopting cohesive regional stances on policy issues, such as the environment, climate change and migration.
Intra-regional trade refers to trade which focuses on economic exchange primarily between countries of the same region or economic zone. In recent years countries within economic-trade regimes such as ASEAN in Southeast Asia for example have increased the level of trade and commodity exchange between themselves which reduces the inflation and tariff barriers associated with foreign markets resulting in growing prosperity.

Regional integration has been defined as an association of states based upon location in a given geographical area, for the safeguarding or promotion of the participants, an association whose terms are fixed by a treaty or other arrangements. Philippe De Lombaerde and Luk Van Lange hove define regional integration as a worldwide phenomenon of territorial systems that increases the interactions between their components and creates new forms of organization, co-existing with traditional forms of state-led organization at the national level. According to Hans van Ginkel, regional integration refers to the process by which states within a particular region increase their level of interaction with regard to economic, security, political, and also social and cultural issues.

In short, regional integration is the joining of individual states within a region into a larger whole. The degree of integration depends upon the willingness and commitment of independent sovereign states to share their sovereignty. Deep integration that focuses on regulating the business environment in a more general sense is faced with many difficulties.
Regional integration initiatives, according to Van Lange hove, should fulfill at least eight important functions:
The strengthening of trade integration in the region
The creation of an appropriate enabling environment for private sector development
The development of infrastructure programs in support of economic growth and regional integration
The development of strong public sector institutions and good governance;
The reduction of social exclusion and the development of an inclusive civil society
Contribution to peace and security in the region
The building of environment programmers at the regional level
The strengthening of the region's interaction with other regions of the world.

The crisis of the post-war order led to the emergence of a new global political structure. This new global political structure made obsolete the classical Westphalia concept of a system of sovereign states to conceptualize world politics. The concept of sovereignty became looser and the old legal definitions of the ultimate and fully autonomous power of a nation-state are no longer meaningful. Sovereignty, which gained meaning as an affirmation of cultural identity, has lost meaning as power over the economy. All regional integration projects during the Cold War were built on the Westphalia state system and were designed to serve economic growth as well as security motives in their assistance to state building goals. Regional integration and globalization are two phenomena that have challenged the pre-existing global order based upon sovereign states since the beginning of the twenty-first century. The two processes deeply affect the stability of the Westphalia state system, thus contributing to both disorder and a new global order.

Closer integration of neighboring economies has often been seen by governments as a first step in creating a larger regional market for trade and investment. This is claimed to spur greater efficiency, productivity gain and competitiveness, not just by lowering border barriers, but by reducing other costs and risks of trade and investment. Bilateral and sub-regional trading arrangements have been advocated by governments as economic development tools, as they were designed to promote economic deregulation. Such agreements have also aimed to reduce the risk of reversion towards protectionism, locking in reforms already made and encouraging further structural adjustment.

Some claim the desire for closer integration is usually related to a larger desire for opening nation states to the outside world, or that regional economic cooperation is pursued as a means of promoting development through greater efficiency, rather than as a means of disadvantaging others. It is also claimed that the members of these arrangements hope that they will succeed as building blocks for progress with a growing range of partners and towards a generally freer and open global environment for trade and investment and that integration is not an end in itself, but a process to support economic growth strategies, greater social equality and democratization. However, regional integration strategies as pursued by economic and national interests, particularly in the last 30 years, have also been highly contested across civil society. There is no conclusive evidence to suggest that the strategies of economic deregulation or increased investor protection implemented as forms of regional integration have succeeded in contributing to "progress" in sustainable economic growth, as the number of economic crises around the world have increased in frequency and intensity over the past decades. Also, there is increasing evidence that the forms of regional integration employed by nation states have actually worsened social inequality and diminished democratic accountability. As a result of the persisting contradiction between the old promises of regional integration and real world experience, the demand from across global civil society for alternative forms of regional integration has grown.

Regional integration arrangements are a part and parcel of the present global economic order and this trend is now an acknowledged future of the international scene. It has achieved a new meaning and new significance. Regional integration arrangements are mainly the outcome of necessity felt by nation-states to integrate their economies in order to achieve rapid economic development, decrease conflict, and build mutual trusts between the integrated units. The nation-state system, which has been the predominant pattern of international relations since the Peace of Westphalia in 1648 is evolving towards a system in which regional groupings of states is becoming increasingly important vis-a-vis sovereign states. Some have argued that the idea of the state and its sovereignty has been made irrelevant by processes that are taking place at both the global and local level. Walter Lippmann believes that, "the true constituent members of the international order of the future are communities of states. E.H. Carr shares Lippmann view about the rise of regionalism and regional arrangements and commented that, "the concept of sovereignty is likely to become in the future even more blurred and indistinct than it is at present.

Regional Integration Agreements

Regional integration agreements (rias) have led to major developments in international relations between and among many countries specifically increases in international trade and investment and in the formation of regional trading blocs. As fundamental to the multi-faceted process of globalization, regional integration has been a major development in the international relations of recent years. As such, Regional Integration Agreements has gained high importance. Not only are almost all the industrial nations part of such agreements, but also a huge number of developing nations too are a part of at least one, and in cases, more than one such agreement.

The amount of trade that takes place within the scope of such agreements is about 35%, which accounts to more than one-third of the trade in the world. The main objective these agreements is to reduce trade barriers among those nations concerned, but the structure may vary from one agreement to another. The removal of the trade barriers or liberalization of many economies has had multiple impacts, in some cases increasing Gross domestic product (GDP), but also resulting in greater global inequality, concentration of wealth and an increasing frequency and intensity of economic crises.

The number of agreements agreed under the rules of the GATT and the WTO and signed in each year has dramatically increased since the 1990s. There were 194 agreements ratified in 1999 and it contained 94 agreements form the early 1990s.

The last few years have experienced huge qualitative as well as quantitative changes in the agreements related to the Regional Integration Scheme. The top three major changes were:
Deep Integration Recognition
Closed regionalism to open model
Advent of trade blocs
The Effects of Integration
It requires coherence of the policies (customs, tax, financial, social policies etc. And entity registration) applied in integrated states. Economic parameters (domestic savings rate, tax rates, etc.) Are striving to one single multitude. Coherence policy finally leads to equal multi-dimensional economic space within integrated area. At the same time, it is very similar to the process of mixing differently colored liquids in a retort: coherence leads to one final color in a retort. It needs permanency of economic integration stages applied to unified states (free trade area, customs union, economic union, political union). Otherwise integration process stagnates, finally leading to termination of economic unions (Belgium-Luxemburg Union).
Economic integration leads to Pareto-reallocation of the factors (labor and capital) which move towards their better exploitation. Labor moves to area of higher wages, while capital - to area with higher returns. It was found [2] that the pair of the value added of sectors and labor disperse within a region in the same way as heat or gas in a space. Domestic saving rates in the member states of economically integrated region strive to the one and same magnitude, described by the coherence policy of economic blocks. At the same time, practical observation shows that this phenomenon is taking place before formal creation of economic unions.

Formulation of economic integration theory has been initiated by Jacob Viner who described trade creation and trade diversion effects caused by economic integration. They actually mean a change in direction of interregional trade flows respectively caused by the change of tariffs within and outside economic union. The dynamics of trade creation and diversion effects was mathematically described by R.T.Dalimov. The finding shows that trade flow (an output moving from region to region) may be described by Navier-Stoxes equation, with the goods flow caused by the price difference - quite similar to gas or liquid moving under pressure difference. Economic integration of states leads to the creation of the terms of trade. Economic union of states obtains more privileged position in trade negotiations.

Economic integration benefits (growth of economy, specifically the GDP; raise of productivity) depend on the level of development as well as a scale of unifying states. For instance, if there are two states being economically integrated, than the larger is the size of economy the less it receives from integration and vice versa (observed empirically). The same principle is observed regarding the level of development of integrating states, although it is not as clear as the firstly mentioned principle. Productivity in the unified area is increased. Remarkably, it is increased more in less developed states, and vice versa (Dalimov, 2008), i.e. According to the principle observed in practice.

Among the main benefits for the countries which decided to be unified is a free access to markets of the other member states. Since the stage of the common market, or since supranational bodies of the union are created, specific regional funds are created to reallocate revenues from more developed states to les developed ones. This way development of the member states is equalized, with less developed ones developing faster, leading to an increase of their earnings per capita and thus purchasing more from more developed partner states.

Economic integration has no war consequence. The European Union has started with agreement between France, Great Britain, Belgium and Luxemburg - on the ohe hand, and Italy and Germany, on the other hand, fought with each other during World War II. In other words, economic integration unites nations, leading them to prosper with each other.
Major Regional Trading Groups
European Union
The European Union (EU) is an economic and political union of 28 member states that are located primarily in Europe. The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states.[14][15] Institutions of the EU include the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union, the European Central Bank, the Court of Auditors, and the European Parliament. The European Parliament is elected every five years by EU citizens. The EU's de facto capital is Brussels. The EU traces its origins from the European Coal and Steel Community (ECSC) and the European Economic Community (EEC), formed by the Inner Six countries in 1951 and 1958, respectively. In the intervening years the community and its successors have grown in size by the accession of new member states and in power by the addition of policy areas to its remit. The Maastricht Treaty established the European Union under its current name in 1993. The latest major amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in 2009.

The EU has developed a single market through a standardized system of laws that apply in all member states. Within the Schengen Area (which includes 22 EU and 4 non-EU states) passport controls have been abolished. EU policies aim to ensure the free movement of people, goods, services, and capital, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development. The euro zone, a monetary union, was established in 1999 and came into full force in 2002. It is currently composed of 17 member states. Through the Common Foreign and Security Policy the EU has developed a role in external relations and defense. Permanent diplomatic missions have been established around the world. The EU is represented at the United Nations, the WTO, the G8, and the G-20.

With a combined population of over 500 million inhabitants, or 7.3% of the world population, the EU in 2012 generated a nominal gross domestic product (GDP) of 16.584 trillion US dollars, representing approximately 20% of the global GDP when measured in terms of purchasing power parity, and represents the largest nominal GDP and GDP PPP in the world. The EU was the recipient of the 2012 Nobel Peace Prize.

European Union Milestones:
1951: Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands signed the Treaty of Paris to establish the European Steel and Coal Community.
1957: The Six signed the Treaty of Rome to establish the European Economic Community (EEC).
1960: The Stockholm Convention established the European Free Trade Association (EFTA).
1962: The Common Agricultural Policy (CAP) was adopted.
1966: The EEC became the European Community (EC); agreement was reached on a value-added tax (VAT).
1967: All remaining internal tariffs were abolished, and common external barriers were imposed.
1972: The currency "snake" was established.
1979: The European Monetary System came into effect; the first European Parliament was elected by universal suffrage.
1990: The first phase of European Monetary Union came into effect; Germany was unified.
1993: The Single European Market came into force.
1999: The single European currency [EURO] came into effect.
2002: EURO coins and notes entered circulation; all IS member states ratified the Kyoto Protocol.

How to Do Business with the EU:
Implications for Corporate Strategy:
Companies need to determine where to produce products.
Companies need to determine what their entry strategy will be.
Companies need to balance the commonness of the EU with national differences.

Challenges Facing the EU:
the transition of economically disparate entrants into the EU
the unanimous adoption of a new constitution
the resolution of the Common Agricultural Policy (CAP) with internal constituencies on the one hand and non-members nations on the other
the harmonization of fiscal, monetary, and commercial policies

The Common Agricultural Policy (CAP) represents a set of rules and mechanisms designed to: i) Regulate the production, trade, and processing of agricultural products in the EU. Ii) Provide farmers with a reasonable standard of living and consumers with safe, quality food at fair prices

Map: European Trade and Economic Integration

Member state
The Union's membership has grown from the original six founding states—Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands—to the present-day 28 by successive enlargements as countries acceded to the treaties and by doing so, pooled their sovereignty in exchange for representation in the institutions.

To join the EU, a country must meet the Copenhagen criteria, defined at the 1993 Copenhagen European Council. These require a stable democracy that respects human rights and the rule of law; a functioning market economy capable of competition within the EU; and the acceptance of the obligations of membership, including EU law. Evaluation of a country's fulfillment of the criteria is the responsibility of the European Council. No member state has ever left the Union, although Greenland (an autonomous province of Denmark) withdrew in 1985. The Lisbon Treaty now provides a clause dealing with how a member leaves the EU.

There are five candidate countries: Iceland, Macedonia, Montenegro, Serbia, and Turkey. However, on 13 June 2013, Iceland's Foreign Minister Gunnar Bragi Sveinsson informed the European Commission that the newly elected government intended to "put negotiations on hold".

Albania has submitted an application. Bosnia and Herzegovina is officially recognized as a potential candidate. Kosovo is also listed as a potential candidate, however since their independence is not recognized by Serbia, nor five of the 28 EU member states, the European Commission refers only to "Kosovo*", with an asterisked footnote containing the text agreed to by the Belgrade–Pristina negotiations: "This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence."

Four countries forming the EFTA (that are not EU members) have partly committed to the EU's economy and regulations: Iceland (a candidate country for EU membership), Liechtenstein and Norway, which are a part of the single market through the European Economic Area, and Switzerland, which has similar ties through bilateral treaties. The relationships of the European microstates, Andorra, Monaco, San Marino, and the Vatican include the use of the euro and other areas of co-operation.

The North American Free Trade Agreement (NAFTA)
The North American Free Trade Agreement (NAFTA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada–United States Free Trade Agreement between the U.S. and Canada. In terms of combined purchasing power parity GDP of its members, as of 2007 the trade bloc is the largest in the world and second largest by nominal GDP comparison.

NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

NAFTA specifies:
market access via the elimination of tariff and nontariff barriers
the harmonization of trade rules
the liberalization of restrictions on services and foreign investment
the enforcement of intellectual property rights
a dispute settlement process
regional labor laws and standards
strengthened environmental standards Rules of Origin and Regional Content:
Rules of origin-goods and services must originate in North America to get access
to lower tariffs.
Rules of Regional Content-50 % of the net cost of most products must come from the NAFTA region


Map: Regional Economic Integration in North America:

Provisions
The goal of NAFTA was to eliminate barriers to trade and investment between the U.S., Canada and Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all U.S.-Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico that were to be phased out within 15 years. Most U.S.-Canada trade was already duty free. NAFTA also seeks to eliminate non-tariff trade barriers and to protect the intellectual property right of the products.

In the area of intellectual property, the North American Free Trade Agreement Implementation Act made some changes to the Copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright (within NAFTA) on certain motion pictures which had entered the public domain.

Trade
The agreement opened the door for open trade, ending tariffs on various goods and services, and implementing equality between Canada, USA, and Mexico. NAFTA has allowed agricultural goods such as eggs, corn, and meats to be tariff-free. This allowed corporations to trade freely and import and export various goods on a North American scale.

Trade balances
The US goods trade deficit with NAFTA was $94.6 billion in 2010, a 36.4% increase ($25 billion) over 2009.
The US goods trade deficit with NAFTA accounted for 26.8% of the overall U.S. goods trade deficit in 2010.
The US had a services trade surplus of $28.3 billion with NAFTA countries in 2009 (the latest data available).

Investment
The US foreign direct investment (FDI) in NAFTA Countries (stock) was $327.5 billion in 2009 (latest data available), up 8.8% from 2008.
The US direct investment in NAFTA countries is in nonbank holding companies, and in the manufacturing, finance/insurance, and mining sectors.
The foreign direct investment, of Canada and Mexico in the United States (stock) was $237.2 billion in 2009 (the latest data available), up 16.5% from 2008.

Industry
Maquiladoras (Mexican factories that take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the loss of American jobs. Hufbauer's (2005) book shows that income in the maquiladora sector has increased 15.5% since the implementation of NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last five years while the share of exports from maquiladora-border states has decreased. This has allowed for the rapid growth of non-border metropolitan areas, such as Toluca, León and Puebla; all three larger in population than Tijuana,Ciudad Juárez, and Reynosa.

Regional Economic integration In The Americas
Latin America and the Caribbean (LAC) encompass diverse countries in terms of population, economic size, geography, stage of development, and linguistic roots, as well as ethnic and cultural backgrounds. In 2010, the LAC region accounted for about 8 percent of world population, and contributed about 7 percent of world GDP. When the United States and Canada are included, the hemispheric share of the world economy rises above 35 percent. Currently, Latin America is well integrated into the international trading system—a significant shift from the past. Latin America and the Caribbean accounted for 6 percent of world merchandise exports and 3 percent of world services exports in 2010. Beginning in 1990, trade openness expanded significantly. While merchandise trade as a share of LAC GDP nearly doubled during the 1990-2007 period, reaching 40 percent of regional GDP before tapering to 34 percent by 2010, nearly all of the countries in the Americas are net importers.4 Overall, the regional balance of trade reached a $12 billion deficit in 2010.5The growth of LAC exports to the United States has slowed in recent years, from an annual average of 19 percent in the 1990s to 6 percent during the 2000–2010 period. At the same time, countries have forged more trade agreements with one another and intensified regional efforts on trade facilitation. As a result, most LAC countries—especially smaller economies, which experience disproportionate effects on their trade from trade agreements—have seen their regional bias, measured by the share of regional trade, increase since the early 1990s. Intraregional trade flows seem small compared to total exports in Latin America and the Caribbean, reaching 18 percent in 2010. The depth of intraregional integration also pales in comparison with other regional blocs with higher ratios, such as the European Union (64 percent), Asia Pacific (48 percent) and Association of Southeast Asian Nations (ASEAN, 26 percent). However, more recently, intraregional trade in the LAC region has been very dynamic, rising to 18 percent of the total in 2010, an increase of 7 percentage points from 1990.6Sub-regional trade has also grown rapidly.

Map: Latin American Economic Integration
Future Scenarios
There are several new pathways for the future of trade integration in the Americas to take: promote multilateralism, strengthen regional blocks and explore regional convergence.
Multilateralism
In an increasingly integrated world, multilateral trade liberalization matters more than ever. One of the key benefits of multilateral trade negotiations is that the principle of "most-favored-nation" (MFN) applies, such that any trade preference extended to one WTO member must be offered to all. Under a successful conclusion of multilateral liberalization, firms everywhere could bypass overlapping preferential agreements and rules of origin requirements. Multilateral negotiations would be optimal and should remain a priority. At the same time, the new concept of "multilateral zing ptas" has emerged as a means to enhance compatibilities between ptas and the global trading system, and to strive to advance toward global free trade by way of ptas.
Sub-regionalism
By deepening sub-regional integration initiatives (such as Mercosur, NAFTA, CAFTA, CACM, CARICOM, etc.), Latin American countries can consolidate regional trade preferences and move toward building deeper common markets. CAFTA provided a pragmatic alternative for convergence of disciplines and multiplicity of rules of origin, by cumulating rules of origin requirements in some textile categories. In the case of Mercosur, consolidation into a customs union as a bloc—including macroeconomic convergence antling of exceptions in common external tariff (CET) and duties—would provide the political commitment necessary to advance the Mercosur process. Mercosur is the second largest customs union outside of the EU and epitomized the "new regionalism" in the 1990s, which was based on "open regionalism" and shared development goals. The Pacific Alliance is the most recent and pragmatic response to new challenges at the sub-regional level, with a strategic focus on positioning the region toward the emerging Asian markets. However, there are still challenges. For example, after the Mercosur customs union agreement was signed in Ouro Preto in 1994, there have been persistent tariff exceptions for both intra-zone zero tariffs and common external tariffs. Two of the founding members of the Andean Community (CAN)—Chile and Venezuela—left the grouping in 1975 and 2006, respectively, because of disagreements over trade and other issues. Recently, the four remaining full members have adopted somewhat divergent positions over trade policy. There are also inadequacies that need to be addressed in regional dispute settlement mechanisms around Latin America and the Caribbean, as they can abet non-tariff barriers.
Convergence
Perhaps the most politically feasible solution to the PTA tangle is convergence, a process by which the various existing ptas become connected to each other. Convergence was pursued in Europe in the late 1990s, when the various ptas criss-crossing the old continent were brought together under a single, pan-European area of accumulation of production. This is currently the focus of various country groupings in the Americas and Asia-Pacific. A region-wide agreement in LAC would yield great economic benefits. It would better link the major economies in North and South America, whose bilateral trade—as projected by gravity models—could expand two- or three-fold in response. The feasibility of convergence in the area of market access regimes among rtas in the Americas is rather substantial. Tariff elimination—the first precondition for effective convergence—is highly advanced in the Americas. There are already a number of initiatives seeking convergence that are at different stages of discussion, such as the Latin America Free Trade Area initiative (Espacio de Libre Comercio), the -country Pacific Basin Forum (ARCO), or the more recent Pacific Alliance initiative. The Pathways to Prosperity in the Americas effort involving the United States, Canada and Latin American countries13 also includes discussions on common trade issues. Five countries of the Americas are also involved in convergence discussions in the Asia-Pacific Economic Cooperation (APEC) forum. More recently, the Trans-Pacific Partnership (TPP) negotiations have increased complexity to this emerging trans-pacific integration and convergence dynamic.
Beyond Agreements
To date, there are more than 50 extra-regional ptas being implemented, negotiated or proposed. However, trade agreements are not enough. While agreements can be a "sovereign remedy"—delivering important benefits to the member states and the global trading system—realizing their full potential for fostering trade, regional integration, and national welfare requires an intense focus on complementary policies conducive to trade both at the regional and national levels.For example, the lack of adequate physical infrastructure and trade links among Latin American countries has precluded closer trade integration. Intra-regional trade in LAC is lower than a decade ago, which suggests it has not become an engine of growth as it has in Asia, where complex networks of vertical supply chains contributed to robust growth of intra-firm and intra-industry trade. Experience in Latin America suggests that regional integration benefits small and medium-sized enterprises (smes) more than bilateral ptas with developed countries. However, unlike Asia, Latin America has yet to develop extensive and integrated cross-country supply chains that would facilitate competitiveness and provide smes with an indirect role in targeting industrialized markets. This is a worthy issue to address. Regional integration in Asia has been intensified through intra-industry and intra-firm trade.
The Asia Pacific region did not use the proliferation of ptas to successfully integrate itself with the world economy. Instead, domestic reforms and the expansion of "factory Asia" supply networks helped boost intra-regional trade, which has grown by 10 percent since 1990 to reach 46 percent today (compared with about 18 percent in Latin America). In addition, trade or regional integration agreements may bring uneven benefits to the countries involved, as well as to different constituencies within countries. For this reason, supportive policies that ensure the gains from regional integration and intra-regional trade are consolidated and distributed equitably are an important part of the picture. On the positive side, there are now efforts to foster trade facilitation in the region. In 2000, 12 South American countries16 launched the Initiative for the Integration of Regional Infrastructure (IIRSA), which has developed 524 infrastructure projects across the region—covering transportation, energy and communications—requiring investment of at least $95 billion. Beyond building physical infrastructure, IIRSA also supports the harmonization of regulation across the region and improvements in cross-border traffic. The revival of the South American Community of Nations (UNASUR) and the Meso-American Integration and Development Project, which stretches from Mexico to Colombia, includes regional infrastructure and trade facilitation reforms. The Pacific Alliance initiative also includes proposals to go beyond trade and investment issues. The United States and Canada are participating in the Pathways to Prosperity in the Americas initiative, which includes technical capacity building for small businesses, as well as investments in clean energy and development.

Regional Economic Integration in Asia
Trade Policy
Asia fits the global trade-policy pattern. First, trade and FDI liberalization had its heyday in the 1980s and '90s. But it has slowed down or stalled since the Asian crisis, with marginal reversals in some countries in the wake of the recent global economic crisis. Overall, however, the massive external liberalization of the Washington Consensus era has not been rolled back. Also, given the long-drawn-out failure of the WTO's Doha Round, there has been no multilateral liberalization or rule-strengthening for over a decade. Second, the thrust of trade policy has shifted from non-discriminatory unilateral liberalization, backed up by the Uruguay Round agreements (and WTO accessions for China and Vietnam), to discriminatory ftas. Note that ftas, unlike previous unilateral measures, have not been a motor of additional liberalization (see below).The following sections first cover Asian ftas, and then Asian regional-integration initiatives.
1. Asian FTAs
In essence, Asia has played FTA catch-up with other regions. Ftas have proliferated like wildfire. By June 2009, east Asia plus India (the ADB's "integrating Asia") had concluded 54 ftas, up from 3 in 2000. 40 ftas are currently in effect, and another 78 are either under negotiation or proposed (Table 5). Most of these (74% of concluded ftas) are bilateral ftas rather than plurilateral or regional negotiations and agreements. Many – indeed the majority for China, India, Singapore and South Korea -- are with extra-regional partners.13 The major Asian players – China, India and Japan – are involved, as are South Korea, Australia, New Zealand, the ASEAN countries, as well as other south-Asian countries. The USA is involved with individual Asian countries, as are some Latin American countries and South Africa. The EU has FTA negotiations with South Korea, India and ASEAN.
What do these ftas look like? It is important to distinguish hype from reality. FTA hype comes from politicians, officials, and indeed academics and consultants commissioned to do computable-general-equilibrium (CGE) modeling to demonstrate big welfare gains from ftas. CGE models tend to assume clean and comprehensive ftas. The reality is that these agreements are weak-to-very weak: they are partial, somewhat dirty and mostly "trade light". At the weaker end of the spectrum, ftas are limited to preferential tariff cuts on a limited range of goods. The stronger ftas take 90 per cent of tariff lines down to zero (more or less). They also contain provisions on tackling non-tariff barriers (ntbs) and liberalizing services and investment. But these are very weak and have resulted in hardly any net liberalization. Many Asian ftas – indeed the majority of east-Asian ftas -- are advertised as "WTO-plus", by the Asian Development Bank.14 This might be literally true. But that means little in practice, for WTO disciplines on export restrictions, services, investment, government procurement and a host of other regulatory barriers are also weak-to-very weak. In sum, most ftas have been limited to tariff cuts, but have made little dent into non-tariff regulatory barriers. The latter, more than the former, impede regional economic integration – for mnes with their cross-border manufacturing supply chains, for home-based firms, for agricultural and services suppliers, and for final consumers. That applies particularly to east Asia, where tariffs have come down to relatively low levels. Tariffs in south Asia are higher, though they too have been decreasing. And ntbs in south Asia remain stubbornly high; indeed among the highest in the world.Japan, China, the ASEAN countries, South Korea and India have trade-light ftas. India is perhaps the worst offender, with widespread carve-outs and very restrictive rules-of-origin (ROO) requirements. Australia and New Zealand have less weak ftas with Asian partners, but these are hardly strong, "deep-integration" agreements that seriously liberalise trade and FDI, particularly by tackling ntbs and regulatory barriers. Some US and EU ftas come closer to the deep-integration benchmark, e.g. The US-Singapore, US-Korea and US-Australia ftas, and the EU-Korea FTA. (The US-Korea and EU-Korea ftas have not yet been ratified.) In addition, there are collective ASEAN ftas with third countries (China, Japan, India, South Korea, Australia-New Zealand, and ongoing negotiations with the EU). These mirror trade-light bilateral ftas.15In addition, Asian ftas are bedeviled by differing roos within and between agreements. Asia now has a cornucopia of roos, using different criteria for different products, and of varying complexity and restrictiveness. This occurs within the same agreement, with stricter roos for "sensitive" imports that threaten domestic producers. And it is compounded by widely differing roos between agreements. For example, Japan's ftas with Malaysia and Thailand have different roos for automobiles. This is the "noodle- bowl", the Asian equivalent of the global "spaghetti bowl" of overlapping ftas with myriad discriminatory provisions. Learning about FTA provisions, dealing with complex tariff schedules, and complying with roos, all raise business costs. Not surprisingly, business utilisation of FTA tariff preferences is rather low, with estimates ranging from 3-22% in east-Asian ftas. Mnes with regional and global production networks usually pay the MFN duty, which costs them less than complying with roos in multiple ftas, or move production into duty-free export-processing zones. Smaller firms are even more burdened by compliance costs. Hence even headline tariff elimination – the core of Asian ftas – is not likely to deliver advertised gains.
2. APEC
APEC's membership is diverse and unwieldy; its agenda has become impossibly broad and unfocused; its vaunted Open (i.e. Non-discriminatory) Regionalism is dead in the water; and these days it is driven by shallow conferencitis and summitry. It cannot be expected to contribute anything serious to regional economic integration. An APEC FTA initiative (FTAAP – Free Trade Area of the Asia Pacific) was launched at the APEC Hanoi Summit in 2006.17 It has gone nowhere: political and economic divisions in such a large, heterogeneous grouping Are manifold and intractable. The best APEC can hope for is to encourage "best-practice" trade-related policies through research, mutual surveillance and exchange of information – akin to what the OECD does for its members. But even that may be too much to expect.
3. ASEAN
The ASEAN Free Trade Area (AFTA) has an accelerated timetable for intra-ASEAN tariff elimination, but seen little progress on "AFTA-plus" items such as services, investment, on-tariff barriers, and mutual recognition and harmonization of standards. An ASEAN Economic Community (AEC), a single market for goods, services, capital and the movement of skilled labour, with a fast track for "priority sectors", is supposed to be achieved by 2015. A new ASEAN Charter gives the group a common legal personality. On the economic front, the Charter contains two new agreements, the ASEAN Trade in Goods Agreement (ATIGA) and the ASEAN Comprehensive Investment Agreement (ACIA).18 These integrate separate agreements into single consolidated legal texts on trade in goods and FDI respectively. The ASEAN Agreement in Services (AFAS) remains unchanged. Will these initiatives spur intra-regional integration and be a viable collective force in Asian and wider international relations? The track record indicates otherwise. AFTA is among the strongest Asian ftas, but it is also trade-light. Its vaunted success is the Common Effective Preferential Tariff (CEPT). Intra-regional tariffs have come down close to zero in the old ASEAN members, with longer transition periods for the poorer new ASEAN members. But the CEPT is mostly a paper exercise: ASEAN countries' tariffs have been coming down unilaterally in any case; and there has been minimal take-up of CEPT preferences by firms. ASEAN also has agreements on tackling non-tariff barriers and liberalising services and investment, but these are very weak and have resulted in hardly any net liberalisation. In sum, ASEAN economic integration has been limited to tariff cuts, but it has a pathetic record in tackling intra-regional regulatory barriers. Will the ASEAN Charter change matters? ATIGA codifies ASEAN's existing provisions on tariffs, ntbs, trade facilitation and other trade-related measures. But it does not appear to contain new initiatives or legal instruments to tackle ntbs. ACIA does have some novelties, in addition to bringing together a range of FDI instruments in different legal texts. These include the extension of national treatment to ASEAN-based foreign investors from the start, with a shorter deadline for full liberalization (2015); wider scope of investments covered; a single negative list for scheduling reservations; and a new investor-to-state dispute settlement mechanism to complement existing ASEAN state-to-state dispute settlement. Potentially, these new instruments could strengthen investment liberalization and investor protection compared with the old Asian Investment Area (AIA). But it leaves big questions and gaps. And it all depends on how provisions are fleshed out, interpreted and implemented. What will be the criteria for ASEAN-based mnes to qualify for non-discriminatory treatment? How will investments covered by ACIA relate to services covered by AFAS, especially through "commercial presence" (i.e. FDI through "mode three of supply" in WTO jargon)? Bear in mind that AFAS, a weak agreement that is barely stronger than the WTO's very weak General Agreement on Trade in Services (GATS), remains unchanged. Will disciplines cover both pre- and post-establishment regulatory barriers? "Post-establishment" regulatory barriers, e.g. Licensing and operating requirements for foreign service-providers, are the biggest obstacles to trade in services; and they are also the most difficult to discipline through multilateral, bilateral and regional agreements. How will governments use (or abuse) the single negative list? Finally, what shape will investor-to-state dispute settlement take – if it is implemented? In general, it is open to doubt whether the AEC and the Charter will really change commercial facts on the ground, especially on non-tariff regulatory barriers that are the major obstacles to ASEAN economic integration. In general, I do not hold out much hope for these new agreements to be a vehicle for trade and FDI liberalization in ASEAN. That is too much to ask of the ASEAN Charter. If the Charter is to have additional value, I think it lies in the modest goal of improving transparency rather than out-of-reach ambitions to directly accelerate liberalization and regional integration. ATIGA's one small innovation is its call for the establishment of an ASEAN Trade Repository (ATR). This is supposed to be a comprehensive database and a single reference point for all tariff and non-tariff measures on cross-border trade in the region. That is a good idea, as is one for an ASEAN "implementation scorecard". If designed and implemented properly, they could inject much-needed transparency into trade policies in ASEAN. But that is a big "if". The resulting information and analysis must be available to the public, and business constituencies must be encouraged to plug in, if these ideas are to work. It would be no use to smother such mechanisms within the safe bounds of ASEAN inter governmentalism, cut off from business and the public. Given ASEAN's track record, it has no prospect of coming close to a "single market" by the AEC's 2015 deadline – or even by 2020 or 2025. To talk EU-style Single Market language is risible. It is also way offer track to talk of emulating the "EU model" in terms of building common institutions and strengthening common policies. The EU model is almost totally irrelevant to ASEAN. Political, economic, cultural and institutional gaps in southeast Asia are historically larger than they are in Europe; and there is precious little of a common tradition, cultural and otherwise, to draw on for anything more than quite shallow integration. And to a cynic, ASEAN initiatives come across as rhetorical or paper-tiger exercises. "The ASEAN Way" subsumes lofty rhetoric, ambitions, visions and blueprints, all convenient window dressing to cover intergovernmental cracks and present the appearance of harmony – while governments get on separately with their national agendas.

Map: Association of Southeast Asian Nations (ASEAN)
4. SAFTA
South Asia's regional-integration initiatives are even weaker than in east Asia – not surprising given its abysmal record on intra-regional trade. South Asia's strongest FTA is that between India and Sri Lanka. But this is actually weak, with carve-outs, tariff-rate quotas and stringent roos effectively excluding or restricting up to half of bilateral trade. The South Asian Association of Regional Cooperation (SAARC) was founded in 1985, and a South Asian Preferential Trade Area (SAPTA) became operational in 1995. The latter had limited product coverage. The South Asian Free Trade Area (SAFTA), operational since 2006, is supposed to be a full-fledged FTA by 2015. To date it is restricted to trade in goods. But tariff lines in members' "sensitive lists" exclude just over half of intra-regional trade, in addition to very restrictive roos on products targeted for tariff reduction. Other ntbs make matters worse. For example, a "rule of destination" restricts entry of covered imports to specified Indian ports and land customs stations. Finally, trade between SAFTA's two largest members, India and Pakistan, is minuscule. Bilateral trade is throttled because neither country effectively accords the other most-favoured-nation (MFN) status. It is extraordinary that two countries with such a long shared border, and which, pre-independence, were a unified political-economic space, should have bilateral trade that amounts to less than 1 per cent of their total trade.19The economic case for SAFTA is weak to begin with. SAFTA members are low-income and least-developed countries with roughly similar trade structures. Hence they trade in similar, competing low-value products. That means the welfare benefits of FTA liberalization will be limited – more so than ftas with advanced, more efficient and dynamic economies in which complementary (North-South) trade can be liberalized, with attendant technology transfer and FDI. Also, SAFTA members have relatively high tariffs with respect to each other and third countries (not to mention high ntbs and FDI restrictions). That makes significant trade diversion much more likely when intra-regional trade is liberalized in a discriminatory manner. These distortive effects will be compounded by the partial, messy nature of intraregional trade liberalization.

5. Wider regional-integration initiatives: ASEAN Plus Three, ASEAN Plus Six, APC, TPP
Lastly, there is much talk in the region of folding bilateral ftas and collective ASEAN ftas with third countries into larger, integrated ftas that would cover east Asia, perhaps include south Asia, and even stretch across the Pacific. At the more modest end of the scale, the Trans-Pacific Strategic Economic Partnership Agreement is a four-way FTA (dubbed "P4") that brings together Singapore, Brunei, New Zealand and Chile, all small, open economies with a network of pre-existing bilateral ftas. Australia, Peru and Vietnam – and now the USA – have agreed to negotiate with the P4 to enter an expanded Trans-Pacific Partnership (TPP). More ambitiously in terms of geographic coverage, an "ASEAN Plus Three" (APT) FTA (the "three" being Japan, South Korea and China) has been touted. There is talk of an "ASEAN Plus Six" FTA that would subsume APT plus India, Australia and New Zealand. The first East Asia Summit (EAS), held in Kuala Lumpur in 2005, gave impetus to these ideas. An ASEAN-Plus-Six FTA has been promoted by the Japanese government – as a counter to what Japan sees as an inevitably China-centred APT. And now the Australian prime minister, Kevin Rudd, has floated the idea of an Asia-Pacific Community, probably reaching across to North America and some South American countries. This would be an overarching forum that would cover political, security and economic issues. The ADB advocates a region-wide FTA as part of its general promotion of Asian regional economic integration. In Emerging Asian Regionalism, it argues that the consolidation of Asian ftas into a single FTA would yield substantial welfare gains.21 CGE modeling shows large income gains to FTA members, with small losses for the rest of the world and an overall gain to world income. The gains from an ASEAN-Plus-Six FTA or an east Asia-plus-India FTA would be larger than from an east-Asian FTA due to the inclusion of more countries with more complementary trade possibilities, e.g. Between India and east Asia (Table 6). These gains would flow from greater specialization, economies of scale, FDI and technology transfer that free access to a much bigger market would facilitate. A region-wide FTA would also substantially reduce trade diversion and other market-distorting effects from the noodle bowl of overlapping bilateral and sub-regional ftas. ASEAN-Plus-Six, with half the world's population and one third of global GDP, would be the third pole of the global economy. This logic prompts some observers to call for an APT FTA, connecting ASEAN's AEC, ASEAN-Plus-One ftas and possibly a northeast-Asian FTA (China, Japan and South Korea). An APT FTA could then be expanded into an ASEAN-Plus-Six FTA.22I am skeptical of region-wide ftas, just as I am skeptical of bilateral and sub-regional ftas in Asia. True, a clean, comprehensive, deep-integration east-Asian or pan-Asian FTA would yield benefits – up to a point. Such an FTA would have: comprehensive goods coverage; comprehensive coverage of services and investment; strong, WTO-plus provisions on government procurement, competition rules, customs procedures and product standards; strong cooperation on a wide range of trade-related regulatory issues to improve transparency, facilitate market access and boost competition; and simple, generous and harmonized roos to minimize trade diversion and red tape. Finally, non-preferential (MFN) tariffs should be low in order to minimise any trade diversion resulting from the FTA.23If such conditions were met, regional supply and demand would be stimulated, and there would be stronger regional market integration. But the economic case for a region-wide FTA is still not cut-and-dried – and indeed is flawed. That is because of the continuing dependence of existing (east-Asian) regional integration on extra-regional (Western) demand, mediated by regional production networks, processing trade and global supply chains. Regional FTA advocates argue that the bulk of trade involved, especially in ICT products, takes place duty-free as it is covered by the WTO's Information Technology Agreement (ITA) and export-processing zones. But the ITA's coverage is partial and outdated: it does not cover electrical appliances and some transport equipment, for example. In addition, Asian countries retain not-insignificant tariffs in several product categories outside ICT in which processing trade is emerging.24 Hence a region-wide FTA, while promoting intra-regional trade in finished goods, would compromise processing trade linked to extra-regional markets where tariff barriers still exist. Negative effects would be worse with complicated roost: identifying products for tariff classification, tracing their origin, measuring their value-added, among other compliance issues, are time-consuming and costly for trade in parts and components in which production is fragmented and shared across many countries – much more so than for trade in final goods with simpler, "start-to-finish" production concentrated in one or two countries. The biggest risk is that a region-wide FTA, by maintaining barriers to non members while freeing up trade among members, would thwart the expansion of global supply chains beyond ICT into other areas of manufacturing, and indeed into services and agriculture.
Regional Economic Integration in Africa
Regional integration initiatives in Africa have a long history, dating back to the establishment of the South African Customs Union (SACU) in 1910 and the East African Community (EAC) in 1919. Since then a number of regional economic communities have been formed across the continent, particularly since the 1970s. Currently there are about 10 or so regional economic groupings in Africa. Today there is no country in Africa that isn't a member of at least one regional economic group. As reflected in the number of regional agreements both in the continent and world- wide, therefore, the issue continues to occupy a center-stage in the economic agenda of countries. In addition to agreements at a regional level, attempts have also been underway to create economic cooperation (and ultimately meaningful economic integration) among African countries at continental level. This effort culminated in the signing of the African Economic Community Treaty (or the Abuja Treaty) in 1991. This treaty came into force in 1994. Among the initial stage objectives of the treaty is to establish continent-wide economic cooperation by strengthening the existing (and encouraging the formation of new) regional economic communities (rocs henceforth) across the continent. Accordingly, as Teshome (1998) noted, six rocs within the continent were perceived as the main building blocks for such a continent-wide integration initiative1. The intent and declarations to form a certain level of continent-wide unity continues unabated until today as demonstrated in the Sirte Declaration of September 1999 (which aimed at a speedy implementation of the Abuja treaty), and that of Loma held in July 2000, which agreed to concretize that agreement.

Map: Regional Economic Integration in Africa

Major Issues in African Economic Integration
Success or failure of regional integration initiative should be evaluated in the context of the objectives it sets to achieve, and the political, economic and institutional context under which it operates. In the case of regional integration in Africa, all regional groupings—including the more recent ones like COMESA, set out to eventually form a common market area among member countries. Judged against this objective, the consensus seems to be none of the regional groupings have to date successfully fulfilled the requirements of a functional common market, in many cases not even that of a customs union. This suggests that more often than not, governments failed to implement the treaties they signed, which in turn suggests lack of political commitment in practice (in contrast to pronouncements). Some of the possible reasons are listed below.

1. Issues of Complementarily
Early regional economic groups were formed when most of the respective members were implementing import substitution growth strategy. While such a strategy could be conducive to regional cooperation in order to expand market size, its focus on encouraging domestic production may hamper division of labor and specialization (which is implied by regional integration) among countries. This is particularly true when the initial trade structure among REC members is similar. This is shown in Tables 6 and 7 in Appendix 1.3. Table 6 shows that COMESA's exports to its dominant trading partners (EU) are primary products, coffee being an important one. The only important manufactured product exported being textiles. Similarly, Table 7 shows that COMESA's imports from EU are predominantly manufactured goods that fall in the SITC classification 5, 6 and 7. Thus, from the two Tables it is safe to conclude that members of COMESA export nearly similar primary products and import manufactured goods form their main trading partner, the Europeans Union. This shows the non-complementary nature of the intra-REC trade. However, as shown by Weeks and Subset (1998) this aggregate primary commodity category hides the huge potential trade in agricultural commodities, in particular in a grain that does exist in Africa. This potential might even be higher if one is able to account for unrecorded cross-border trade.

2. Revenue Loss
Reducing trade barriers in economies where tariff revenue is one of the most significant sources of government revenue complicates the inter-temporal tradeoff between the apparent short-term loss of revenue and the expected long-term benefits emanating from regional integration. In Kenya, for instance, government revenue from its imports form EU constitutes 10% of its total revenue (Range 2000). Given that Kenya is a more liberalized country the revenue loss for other countries could be large. At present the potential revenue loss from intra-COMESA is low owing to the low level of intra-regional trade flows. For instance, Ethiopia's revenue loss due to opening its market to COMESA is less than 1 percent of total revenue since its trade with COMESA is negligible (although shifting form EU to COMESA could mean a lot of loss in tax revenue). Table 3 provides static estimation of the magnitude of revenue loss if member countries abolish tariff among themselves. The Table needs to be taken cautiously as it doesn't consider both the possibility of shifting to COMESA suppliers and an institutionalization of a common external tariff which would be lower than the rate currently in use by members on a third country. As could be seen from Table 3, the average revenue loss is extremely small (3 to 3.5 % of government revenue excluding grants).

3. Compensation Issues and Variation in Initial Condition:
This relates to the issue of appropriate mechanism that ensures that gainers are compensating losers in the medium term and losses are minimized in the long run. Tax revenue loss is a case in point. Such an immediate and a direct loss may create hesitation among member countries unless they foresee an immediate benefit from the integration process. More than revenue loss, however, most counties are concerned about fierce competition from relatively industrialized members such as Kenya, Mauritius and South Africa. COMESA for instance identifies that the weakest members suspect that stronger countries will take advantage of them. And in an integration scheme where countries are at different levels of development and hence the gains from integration are disproportionate, the commitment to implement agreed upon treaties could be adversely affected. In the case of COMESA, the present industrial base of member countries is feeble except small industries in Kenya, Zimbabwe and Mauritius. Even these countries have difficulties competing with South Africa and increasingly with Egypt. There is no concrete industrialization program of the national economies designed in the framework of COMESA. Further, even if gainers agree to compensate losers in principle, setting up an agreeable mechanism and implementing it in a sustainable manner, is a complex exercise. And because such issues, in many cases, have not been addressed adequately or proposed solutions not implemented properly, they have contributed to the weak performance of regional agreements in Africa.

4. Political Issue: Loss of Sovereignty and Lack of Political Commitment:
Regional integration experience in Africa indicates that countries are hesitant to create supra-national bodies and transfer power to them as a sanctioning authority. The secretariats that are formed (such as that of ECOWAS and SADC, for instance) do not have the legal backing to force countries to fulfill their obligations – such as reducing tariff rates and other trade barriers in accordance to their commitments. When such barriers are largely eliminated owing to liberalization, this reluctance to lose sovereignty is taking a form escalating non-tariff barriers4, which are becoming major problems in COMESA, for instance. The continent-wide initiative (the Abuja Treaty and others that flowed from it) could potentially serve that purpose, but has yet to setup the structure to do so. On political commitment, despite the rhetoric, practical commitment is lacking. It is observed in many rocs, including COMESA, that countries are committed to other multilateral (one being saps) and bilateral commitments than to regional agreements. This is partly explained by aid-dependence, and hence conditionality attached to saps, of member countries.

5. Overlapping Membership
Simultaneous membership of countries in more than one regional group is widespread in Africa (except in North Africa). For instance, in the Eastern and Southern African region, some countries are members of both SACU (Southern African Customs Union) and SADC, and COMESA and SADC at the same time. Similarly in West Africa, many countries that are members of ECOWS (Economic Community of the West African States) are also members of UEMOA (Economic and Monetary Union of the West African States). The usefulness of overlapping membership issue or more generally the existence of subset groups within a larger group, sometimes referred to as variable geometry approach, has not enjoyed the consensus that other issues have received. For instance, Lyakurwa (1997, p. 196), contends, "in the African context, such an approach of variable geometry could, for example, mean making genuine progress at ECOWAS level while maintaining the achievements and benefits of UMOA. But others argue that multiple memberships are a hindrance to regional integration since, among other things, it introduces duplication of effort. For instance, Aryeetey and Oduro (1996) quote mccarthy as arguing that, "It is difficult to envisage how SADC and COMESA, given their convergence to both sectoral cooperation and trade integration, can live and prosper with the overlapping membership of the Southern African countries". An OAU Study to understand problems of country participation in SADEC and COMESA shows that countries do face problems by participating in many recs. These problems include human and financial costs associated with membership, lack of harmonization of policies especially in the areas of rules of origin and customs procedures (see below), a large information gap at policy making and implementation levels, and changing political position of member countries of different rocs are few among many (See Alemayehu 1998). The empirical findings based on the gravity mode for COMESA substantiates the notion that overlapping membership is a problems (see Tables 1 and 2 above) The relevant question to alleviate such problems is to know whether sub-regional groups are serving as building or stumbling blocks to a continent-wide integration? If so, Suliman (2000) asks, 'Do we need to reconfigure the integration building blocks, because of overlap and loss of efficiency? Should the recs be given supra-national authority to enforce common decisions?' All these questions seem to be worth exploring beyond theoretical conjectures to evaluate the prospects of realizing the objectives of continent-wide economic integration.

6. Poor Private Sector Participation
To the extent that implementation of the treaties requires the understanding, conviction, and confidence of the private sector, an active involvement of this sector in particular and the general public at large are crucial. This aspect of the regional integration process in Africa has been singled out as one of the major weaknesses of the initiative (Aryeetey and Oduro, 1997, Aryeetey 2000). Country level studies in SADC and COMESA show that the participation of the private sector is hampered by lack of government resources to ensure full participation, and when some resource are secured, the participation is limited at the level of the chamber of commerce officials. Moreover, lack of adequate knowledge to use existing information at the level of private sector associations is also noted as major problem. Establishing specific government entities that would promote and administer economic integration at a country level (as some countries – Burkina Faso, Senegal, Ghana, and Nigeria and few others- have done) would also not only show commitment of countries but also enhance the effectiveness of implementing the treaties.

7. Implementation Problems of Harmonization Policies:
The importance of harmonizing macroeconomic and trade policies for enhancing economic integration cannot be overstated. Due to the focus of Africa's regional economic integration efforts on trade liberalization policies (tariffs and non-tariff barriers), most analysis mainly focused on the impact of regional integration on trade flows. Such a focus has had a number of problems .Harmonization problems in COMESA, for instance, include: (a) lack of harmonization of tariffs, customs procedures and tax policies as well as incentive package for investment; (b) problems related to donor support. Some donors support SADC while other support COMESA. This usually depends on short-term interest of the donor. Such donor influence creates not only harmonization problems but also unhealthy competition among recs; (c) lack of common position on saps among COMESA members (partly because of the capacity and desire of the sponsoring institutions to deal with individual members) had also created harmonization problems. There is a general problem of significant disparity in country laws about the operation of companies and relevant public offices too. The latter ranged from different interpretation of the rules of origin to lack of harmonization of opening hours at border posts. In contrast, the importance of macroeconomic policy coordination on economic integration has received relatively little attention. But as O'Connell (O'Connel 1997: 90) noted, 'Among the most often cited constraints to greater intra-African trade is the inhospitable macro-economic environment associated with overvalued exchange rates and non-convertible currencies.' Elbadawi (1997) shows a supporting evidence for this although our estimation using another proxy, the parallel market premium, couldn't yield similar results to that of Elbadawi. Clearly, in the context of regional integration, the issue of currency inconvertibility is still a major obstacle while the issue of overvalued currency is of less concern these days due to the widespread exchange rate liberalization polices carried out in many African countries. One should also add, a related obstacle in this context is currency instability, as recently witnessed in the Southern African region (Malawi, South Africa, Zambia and Zimbabwe, for instance). Similar problem is observed in West Africa. Aryeeteye (2000) for instance noted that 'with emphasis on tariff reductions, [it] is unlikely to increase trade significantly if exchange rates are not properly aligned and the underlying macroeconomic framework is unstable' (See also Ndung'u 2000 for a similar argument in East Africa). Thus, in addition to harmonizing trade policies, the gradual coordination of macroeconomic policies, covering fiscal, monetary and operations of all financial institutions, is a necessary condition for a smooth implementation of economic integration.

Commodity Agreements
An international commodity agreement is an undertaking by a group of countries to stabilize trade, supplies, and prices of a commodity for the benefit of participating countries. An agreement usually involves a consensus on quantities traded, prices, and stock management. A number of international commodity agreements serve solely as forums for information exchange, analysis, and policy discussion.

USTR leads United States participation in two commodity trade agreements: the International Tropical Timber Agreement and the International Coffee Agreement (ICA). Both agreements establish intergovernmental organizations with governing councils.
Producers' alliances: exclusive membership agreements between or amongst producing countries (a cartel)
-Organization of Oil Exporting Countries (OPEC): a producer cartel whose members include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela
International commodity control agreements (iccas): agreements between or amongst producing and consuming countries
- International Cocoa Organization (ICO)
- International Sugar Organization (ISO)
The Organization of Petroleum Exporting Countries
OPEC is the Organization of the Petroleum Exporting Countries. It is an oil cartel whose mission is to coordinate the policies of the oil-producing countries. The goal is to secure a steady income to the member states and to secure supply of oil to the consumers.

OPEC is an intergovernmental organization that was created at the Baghdad Conference on September 10–14, 1960, by Iraq, Kuwait, Iran, Saudi Arabia and Venezuela. Later it was joined by nine more governments: Libya, United Arab Emirates, Qatar, Indonesia, Algeria, Nigeria, Ecuador, Angola, and Gabon. OPEC was headquartered in Geneva, Switzerland before moving to Vienna, Austria, on September 1, 1965.

OPEC was formed at a time when the international oil market was largely separate from centrally planned economies, and was dominated by multinational companies. OPEC's 'Policy Statement' states that there is a right of all countries to exercise sovereignty over their natural resources. In the 1970s, OPEC began to gain influence and steeply raised oil prices during the 1973 Oil Crisis in response to US aid to Israel during the Yom Kippur War. It lasted until March 1974. OPEC added to its goals the selling of oil for socio-economic growth of the poorer member nations, and membership grew to 13 by 1975.

In the 1980s, the price of oil was allowed to rise before the adverse effects of higher prices caused demand and price to fall. The OPEC nations, which depended on revenue from oil sales, experienced severe economic hardship from the lower demand for oil and consequently cut production in order to boost the price of oil. During this time, environmental issues began to emerge on the international energy agenda. Lower demand for oil saw the price of oil fall back to 1986 levels by 1998–99.In the 2000s, a combination of factors pushed up oil prices even as supply remained high. Prices rose to then record-high levels in mid-2008 before falling in response to the 2007 financial crisis. OPEC's summits in Caracas and Riyadh in 2000 and 2007 had guiding themes of stable energy markets, sustainable oil production, and environmental sustainability.

Venezuela and Iran were the first countries to move towards the establishment of OPEC in the 1960s by approaching Iraq, Kuwait and Saudi Arabia in 1949, suggesting that they exchange views and explore avenues for regular and closer communication among petroleum-producing nations. The founding members are Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Later members include Algeria, Angola, Ecuador, Gabon, Indonesia, Libya, Qatar, Nigeria, and the United Arab Emirates. In 10–14 September 1960, at the initiative of the Venezuelan Energy and Mines minister Juan Pablo Pérez Alfonso and the Saudi Arabian Energy and Mines minister Abdullah al-Tariki, the governments of Iraq, Iran, Kuwait, Saudi Arabia and Venezuela met in Baghdad to discuss ways to increase the price of the crude oil produced by their respective countries.

OPEC was founded to unify and coordinate members' petroleum policies. Between 1960 and 1975, the organization expanded to include Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates(1967), Algeria (1969), and Nigeria (1971). Ecuador and Gabon were early members of OPEC, but Ecuador withdrew on December 31, 1992 because it was unwilling or unable to pay a $2 million membership fee and felt that it needed to produce more oil than it was allowed to under the OPEC quota, although it rejoined in October 2007. Similar concerns prompted Gabon to suspend membership in January 1995. Angola joined on the first day of 2007. Norway and Russia have attended OPEC meetings as observers. Indicating that OPEC is not averse to further expansion, Mohammed Barkindo, OPEC's Secretary General, recently asked Sudan to join. Iraq remains a member of OPEC, but Iraqi production has not been a part of any OPEC quota agreements since March 1998.

In May 2008, Indonesia announced that it would leave OPEC when its membership expired at the end of that year, having become a net importer of oil and being unable to meet its production quota. A statement released by OPEC on 10 September 2008 confirmed Indonesia's withdrawal, noting that it "regretfully accepted the wish of Indonesia to suspend its full Membership in the Organization and recorded its hope that the Country would be in a position to rejoin the Organization in the not too distant future." Indonesia is still exporting light, sweet crude oil and importing heavier, more sour crude oil to take advantage of price differentials (import is greater than export).

The economic needs of the OPEC member states often affect the internal politics behind OPEC production quotas. Various members have pushed for reductions in production quotas to increase the price of oil and thus their own revenues. These demands conflict with Saudi Arabia's stated long-term strategy of being a partner with the world's economic powers to ensure a steady flow of oil that would support economic expansion. Part of the basis for this policy is the Saudi concern that expensive oil or oil of uncertain supply will drive developed nations to conserve and develop alternative fuels. To this point, former Saudi Oil Minister Sheikh Yamani famously said in 1973: "The stone age didn't end because we ran out of stones."

One such production dispute occurred on 10 September 2008, when the Saudis reportedly walked out of OPEC negotiating session where the organization voted to reduce production. Although Saudi Arabian OPEC delegates officially endorsed the new quotas, they stated anonymously that they would not observe them. The New York Times quoted one such anonymous OPEC delegate as saying "Saudi Arabia will meet the market's demand. We will see what the market requires and we will not leave a customer without oil. The policy has not changed."

Implications:

The effects of regional economic integration can be economic, cultural, and/or political in nature.
Regional (as opposed to global) economic integration occurs because of the greater ease of promoting cooperation on a smaller scale.
Member states must determine the degree of national sovereignty they are willing to surrender in order to capture the benefits of economic integration.
A common market goes further than free trade areas and customs unions by permitting the free flow of capital and labor and possibly harmonizing commercial, monetary, and fiscal policies and establishing a common currency plus a supranational political structure dedicated to dealing with common economic issues.
Commodity agreements exist to help developing countries stabilize prices, supplies, and hence their export earnings.

Conclusions

The effects of regional economic integration can be economic, cultural, and/or political in nature. Regional (as opposed to global) economic integration occurs because of the greater ease of promoting cooperation on a smaller scale. Member states must determine the degree of national sovereignty they are willing to surrender in order to capture the benefits of economic integration. A common market goes further than free trade areas and customs unions by permitting the free flow of capital and labor and possibly harmonizing commercial, monetary, and fiscal policies and establishing a common currency plus a supranational political structure dedicated to dealing with common economic issues. Commodity agreements exist to help developing countries stabilize prices, supplies, and hence their export earnings.


Bibliography

Reference Books:

1.International Business-environments and operations (12th edition)


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