International trade integration levels
Thanks to the globalization that begins from the eighteenth century where countries try to create networks, agreements and close them with other countries to this, it is called commercial integration and as they should know this has their respective levels such as internationalization of companies,Mergers and intra -regional trade are factors that influence the way to the economic integration of nations in this essay will know how the movements between countries benefit these levels.
Let’s start with the basics of economic integration, well economic integration is the gradual and progressive phenomenon between two economies with a single purpose to join and form an economic union, it is said that integration is a process when a growing opening andpolitical and economic interdependence between the nations that are part of the process. In this process, a series of countries join in order to increase and facilitate commercial exchange within the framework of their territories.
These are some of the modalities that economic integration has
- Have and reach a bilateral agreement, it is signed between two countries.
- Obtain a multilateral agreement that are signed between numerous countries with the aim of gradually eliminating commercial barriers.
- Regional integration formulas pursue a more ambitious and specific objective, their objective is to form a single market.
The objectives of economic integration is to obtain the elimination of trade impediments and the free movement of goods, goods and people clearly obtaining a reduction in transport costs between the two countries that are equal, implementation of common policies in different sectors of theEconomy where they are also established obtaining rates or tariffs external to non -member countries of this agreement obtained and finally reduce the risks that generate situations of uncertainty in the global economy.
Obviously there are benefits in this integration, this favors productive specialization, that is to say that each country will dedicate to exploit the sector that most beneficial/profits that generate the country and then we have the elimination of commercial barriers this makes great proportions grow andAnother is that the economic weight of the countries, and therefore to have a more solid economy.
As everything should have its good and the bad and these are several disadvantages especially to countries with less efficient or lower opening levels, since the elimination of commercial barriers implies greater competition between producers and those that are not efficientThe risk of losing the market. Depending on the level of integration there is loss of sovereignty among the members of the agreement. Also with integration an increase in imports is generated.
Commercial integration is formed by levels that can be listed in this way
- Preferential Agreement
- Free trade area
- Customs union
- Common Market
- Economic Union
Full economic integration
Now we are going to explain the preferential agreement is called that because it is the simplest form of economic integration in which the advantages in a mutual way among those who signed these agreements are contracts are determined to facilitate trade between them example the tariffs. The free trade area is the agreement between countries that seek to remove, eliminate internal barriers from trade in order to give freedom to the movement of goods in the area, in this area the member countries of the agreement maintain trade barriers with therest of the countries, in summary, here the rules are established.
The Customs Union is the agreement between countries that are supposed, in addition to the elimination of barriers between member countries, a common tariff policy against other countries. Customs unions require some integration into fiscal and monetary policies of member countries. Its main advantage is that it favors specialization within its territory, translated into an efficient allocation of resources.
The common market is one that is understood by the economic area in which there is a free movement of goods and production factors, as a consequence of the total elimination of internal customs controls and the lifting of existing non -tariff barriers. Given this scenario, labor legislation, the regulations of financial markets, technical and health controls, among others, are provisions that occupy great importance within the signing of the agreement.
Both economic union is that gift from member countries, the economic union is characterized by having a common economic, fiscal and monetary policy, that is, there is a loss of national sovereignty. These policies guarantee harmony between members and create economic stability frames to avoid what any of the members is destabilized.
Full economic integration occurs when the following requirements are contemplated within an agreement: Free trade of goods, common external tariff, free mobility of factors, harmonized economic policy and unified economic policy.
In conclusion, this phenomenon is the one that consists of obtaining the last of a complete economic union, understanding by economy the set of goods and activities that integrate the richness of a set of people or an individual The economy of scale is the increase in productivity caused by theIncrease in the resources invested in the production of goods and from which a reduction in the average cost is derived for each product. An example of free trade zone is NAFTA, created by the United States, Canada and Mexico after the signing of the North American Free Trade Agreement. On the other hand, the Customs Union is an agreement by which two or more countries suppress its borders for trade between them and adopt a common position against third countries.