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Regional Integration for and Against

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Regional Integration for and Against Articles
Mark Drury
445
March 9, 2011
Dr. Paul Mahajan

Regional Integration for and Against Articles
A trade bloc can be defined as a preferential trade agreement between two countries and is designed to significantly reduce trade barriers between the two countries. The integration of countries into trade blocs is commonly referred to as “regionalism” and it does not matter if the trade bloc has a geographical basis or not. They first started in the 1930’s. The main trade blocs of the world are: (1) in Europe, the European Union (EU), the European Free Trade Agreement (EFTA), the European Agreements, and the European Economic Area (EEA); (2) with the United States, the North American Free Trade Agreement (NAFTA), the Canada-US Free Trade Agreement (CUSTA), and the US-Israel Free Trade Agreement; (3) in Latin America, the Common Market of the South Latin American Integration Association (LAIA), and the Caribbean Community and Common Market(CARICOM) (Jones, 2010)
Trade blocs are good because they remove trade barriers between countries. They also regulate the price and trade terms of trade between the two countries. Trade blocs also have a positive impact on welfare if they are more trade creating and less trade diverting. “George Orwell predicted that trade blocs would evolve into continent-spanning empires with ever-changing alliances. The eastward expansion of the EU and use of the Euro, southern expansion of NAFTA into the FTAA, and increasing co-operation in Asia would seem to validate this prediction.” (Jones, 2010) Economist Jeffrey J. Scott of the Peterson Institute for International Economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNP, geographic proximity, similar or compatible trading regimes, and political commitment to regional

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