chapter 9: regional economic integration

regional economic integration

agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other

free trade area

a group of countries committed to removing all barriers to the free flow of goods and services between each other but pursuing independent external trade policies

european free trade association (efta)

a free trade association including norway, iceland, liechtenstein, and switzerland

customs union

a group of countries committed to removing all barriers to the free flow of goods and services between each other and the pursuit of a common external trade policy

common market

a group of countries committed to removing all barriers to the free flow of goods, services, and factors of production between each other and the pursuit of common external trade policy

economic union

a group of countries committed to removing all barriers to the free flow of goods, services, and factors of production between each other, the adoption of a common currency, the harmonization of tax rates, and the pursuit of a common external trade policy

political union

a central political apparatus coordinates economic, social, and foreign policy

trade creation

trade created due to regional economic integration; occurs when high-cost domestic producers are replaced by low-cost foreign producers within a free trade area

trade diversion

trade diverted due to regional economic integration; occurs when low-cost foreign suppliers outside a free trade area are replaced by higher-cost suppliers within a free trade area

european union (eu)

an economic and political union of 28 countries that are located in europe

treaty of rome

1957 treaty that established the european community

european commission

responsible for proposing eu legislation, implementing it, and monitoring compliance

european council

the heads of state of eu members and the president of the european commission

european parliament

elected eu body that provides consultation on issues proposed by the european commission

treaty of lisbon

a european union-sanctioned treaty that will allow the european parliament to become the co-equal legislator for almost all european laws

court of justice

supreme appeals court for eu law

north american free trade agreement (nafta)

free trade area among canada, mexico, and the united states

united states-mexico-canada agreement (usmca)

a trade deal ratified in 2020 that was negotiated as a replacement to nafta