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Euro – Main Points: * The introduction of the Euro implied the beginning of a new era for economic policymaking in Europe, with a new environment calling for new arrangements for economic policy coordination. And the significance of the euro's launch goes far beyond its economic dimension. Its introduction in 1999 was the crowning achievement of a hugely complex political, legal, and technical process. * The level of economic integration between nations is also rising. The most well-known example of this is the European Union (EU). Forms of economic integration * The first level of formal economic integration is known as a free-trade area or agreement (FTA). Under a FTA all members remove tariffs on the products traded with each other, while maintaining their individual tariffs with the rest of the world. One of the issues with this form of integration is that non-member counties will export their products to the member country with the lowest external tariff and then into any of the other member countries with higher external tariffs, this practice is known as transhipment (Appleyard, Field & Cobb, 2006: 376). * The second form of economic integration is known as a customs union (CU). A CU retains all the elements of a FTA but in addition involves the abolishment of their individual external trade policies. This is done by establishing a common external tariff (CET) which removes the possibility of transhipment by non-members. Members of a CU also typically negotiate any multilateral trade initiative as a single unit. The elimination of the need for rules of origin is the single biggest benefit of a customs union over a free trade area. This reduces confusion amongst members and leads to simplifies legal and administrative processes (Holden, 2003). * The third level of economic integration is known as a common market. A common market

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