REGIONAL ECONOMIC

INTEGRATION

Submitted to Dr Sugant R
Submitted by:
Group 3
Chaithanya M-19133
Janhvi Jaiswal-19142
Naga Puzvika-19143
Nishan N-19153
Rohan DP-19163
Umang Kumar-19176
 Our motive is to make a study on Regional
economic integration, covering the objectives,
Agenda benefits, limitations & analysis of the Multilateral
Free trade agreements such as EU, NAFTA, ASEAN
& SAFTA.
 • It refers to an agreement between countries
which removes the trade barriers between those
countries and allows the free flow of goods,
services, human and capital.
Regional •  Some scholars see regional integration simply
as the process by which states within a region
Economic increase their level interaction among economic,
Integration security, political, or social and cultural issues.
• Its functions are strengthening of integration in
the region & development of infrastructure
programs in support of economic growth &
economic integration
 European Union
• It all started when all the visionary leaders came
together to create economic and political
stability to ensure long term peace in Europe
• In 1951, the Treaty of Paris established
European Coal and Steel Community (ECSC)
• Success of ECSC broadened their cooperation
by signing the Treaties of Rome in March 1957
establishing the European Economic
Community (EEC)
• The Treaty of Maastricht signed of 7th February
1992, establishing the European Union (EU)
 Objectives
• Union’s objectives can be read in the Lisbon
Treaty :
• The term Lisbon Treaty is now generally used to
refer to the Consolidated EU Treaties - all the
treaties and amendments governing European
integration from the Treaty of  Rome  up to the
present time.
 The promotion of peace and well being of Union’s
Citizens
 The area of freedom, security and justice without
internal frontier
Sustainable development based on balanced
economic growth and social employment
 A free single market
Impact of • It created one of the world’s biggest single
markets
European • Social Disparities Reduction
Union • The Euro- a single currency for Europeans
 • The pending departure of the United
Challenges of Kingdom (UK) from the EU (Brexit)
European • Migration and related societal
integration concerns
Union • Budget
 NAFTA
• NAFTA stands for the North
American Free Trade Agreement
• Agreement between the United
States, Canada and Mexico
• created to help lower costs of trade
and bolster North American trade
• eliminate all tariffs and taxes on
imports and exports
 • NAFTA was created to open free trade between the
three countries
• President H.W. Bush signed the NAFTA agreement
HISTORY in 1992
•  which was also signed by Canadian Prime Minister
Brian Mulroney and Mexican President Salinas
• The agreement went into effect under Bush's
successor President Bill Clinton, who signed the
agreement himself on Dec. 8, 1993
• By January of 1994, the trade agreement was in
effect.
 • To facilitate the cross-border
movement of goods and services
•  Promote conditions of fair
competition in the free trade area

OBJECTIVES • Increase investment opportunities in

the territories of the parties.
• Provide adequate and effective
protection and enforcement of
intellectual property rights in each
party's territory.
• To encourage economic growth
 Organisational
structure

• Free Trade Commission (FTC),

designated by NAFTA to supervise
the implementation of the
agreement, which has no
permanent location or staff and
rotates meeting places among the
three countries
• Commission for Environmental
Cooperation (CEC), a trilateral body
created by the North American
Agreement on Environmental
Cooperation and located in
Montreal
• Commission for Labor Cooperation
(CLC), a trilateral body created by
the North American Agreement on
Labor Cooperation and to be
located in Dallas
 •   NAFTA benefits transnational corporations.
-These companies sell their products in new markets
and move their production to countries where labor
and other costs are lower.
- As a result, many manufacturing companies leave
Canada for countries where costs are lower (ex:
Challenges Mexico)
•  Barriers and regulations in terms of different
Faced: currencies, restrictions for migration/transfer of
labor/capital
• The illegal immigration of nationals from Mexico into
US has drawn strong opposition and disapproval from
US protectionist elements
•  Lack of trust between Canada-US and Mexico-US, as
Canada and Mexico feel that US dominates them and
restricts their trade
 • Free trade increases sales for the United States,
Canada, and Mexico thus strengthening their
economies
• Lack of tariffs allows countries to sell its goods in
the other countries at lower prices making their
products more competitive in these markets

Merits • Meet challenges of global competition

• Reduced inflation by decreasing costs of imports
• Makes it easier for Americans to purchase
Canadian and Mexican goods and vice versa
• Provisions for the protection of intellectual
property
 MEXICAN WORKERS THERE ARE NO AMERICANS HAVE
BENEFITED LESS REGULATIONS ON LOST JOBS TO
THAN AMERICAN OR CUSTOMS FOREIGN SOIL
CANADIAN
WORKERS

  Demerits

ILLEGAL US TRADE DEFICIT

IMMIGRATION HAS INCREASED
CONTINUES TO
GROW
 • ASEAN stands for Association of Southeast
Asian Nations. Established in 8th august 1967.
• It’s a regional intergovernmental organization
comprising of ten countries in southeast Asia.
• Formed to facilitates economic, political,
ASEAN security, military, educational and sociocultural
integration between the members.
• It stands as one of the largest and important
free trade areas (FTA). Also world’s largest
multilateral forums and blocs.
History
• ASEAN was formed in 1967.
• Foreign ministers of five countries
signed the ASEAN declaration
commonly called Bangkok declaration.
• In 1992 AFTA (ASEAN Free Trade
Area) is formed.
• ASEAN Regional Forum (ARF) formed
in 26th ASEAN ministerial meeting,
which includes 27 states.
• Currently 10 countries are member of
History
ASEAN.
 Objectives

• ASEAN has its origins in the Association of Southeast Asia

(ASA) constituted on 31st July 1961.
• ASEAN main purpose were about cooperation in economic,
social, cultural, technical, educational other fields.
• Also to develop regional peace, freedom and stability through
abiding respect for justice and the rule.
• To collaborate more effectively for greater utilization of their
agriculture and industries, expansion of trade including study
of international commodity trade.
Main 4 Pillars

Single market and production base

Competitive economic region

Equitable economic development

Integration in globalized economy

Challenges faced
Geopolitical stability Governance
New business
and regional challenges for
models
relationships businesses

Growth and
Regional digital
Demographics sustainable
economy
development

Economic
integration
 • Elimination of tariffs and increasing
economic growth.
• Investment opportunities.
• Ease flow of goods and services.
PROS
• Promoting peace and stability with
member states.
• Cultural exchange
CONS

Huge income and

Costly labor Competition
development gap

Illegal migrant
Tariff disparities
issues
 A trade agreement between countries which
promotes trade and economic growth in South
Asia by reducing custom duties for exports
between member countries.

It creates a framework for the creation of the

SAFTA free trade zone covering 1.4 billion people in

India, Pakistan, Nepal, Sri Lanka, Bangladesh,
Bhutan & Maldives.

The 7 foreign ministers of the region signed a

framework agreement on SAFTA with zero
customs duty on the trade of all products in
the region by the end of 2016
 • The South Asian free trade agreement (SAFTA)
was signed in 2004 and came into effect on
January 1 2006
• Signed with the desire of the member states of
History SAARC
• To promote & sustain mutual trade & economic
cooperation
• the goals included forming a common currency
for the region and forming a Customs Union
(CU)
 • Promoting conditions of fair competition in the free trade
area and ensuring equitable benefits to all contracting
states, taking into account their respective levels and
pattern of economic development
• Eliminating barriers to trade and facilitating the cross-

Objectives borders movement of goods between the territories of the

contracting states
• Creating an effective mechanism for the implementation
and application of this agreement, for its joint
administration and for the resolution of disputes
•  Establishing a framework for further regional co-
operation to expand and enhance the mutual benefits of
this agreement
 SAFTA shall be governed in accordance with the
following principles
  • Principles of Governance
Principles • Principles of Obligation
• Principles of Reciprocity and Mutuality
• Principles of Removal of Trade Barriers
• Principle of Facilitation and Harmonisation
 • The Indo-Sri Lankan Free Trade Agreement, one
of the first bilateral agreements within South
Benefits of Asia, is a vivid illustration of two countries
working together to overcome these challenges.
SAFTA • The SAFTA framework agreement carries the
great promise of sustainable regional economic
growth and development.
 • The region has diversity in socio-political and
economic conditions
• Political considerations and geographical
disadvantages for some countries, which are
responsible for affecting intra-regional trading
Disadvantages • Informal trade in the borders of the countries
has been increasing
• Intra-regional flow of capital and technology is
very limited
• Weaker trade links among SAARC countries
 
 • GTAP Simulation Design for Different
SAFTA Scenarios
With the aim of estimating the welfare effects of
the SAFTA on different member countries of the
Future world two different scenarios in the GTAP model
are simulated. Following Table presents the
direction simulation scenarios. In the scenario SAFTA1 all
member countries eliminate their intra-regional
tariffs and keep their tariffs with the rest of the
world unaffected. In the scenario SAFTA2, in
addition to SAFTA1, Bangladesh eliminates her
tariffs for the rest of the world by 50 percent.
Name Explanation India Bangladesh Pakistan Rest of the
countries
SAFTA 1 Full implementation of SAFTA. 100% 100% 100% 100%
100% tariff cut for SAFTA
countries
SAFTA 2 Full implementation of SAFTA. 100% for 100% 100% 100%
100% tariff cut for safta countries SAFTA+
50% for
and Bangladesh reduces it MFN
MFN
tariff by 50% Tariff
Reference
https://theaseanpost.com/article/success-and-challenges-within-asean
-integration

https://asean.org/asean/about-asean/history/

https://en.wikipedia.org/wiki/South_Asian_Free_Trade_Area#History

https://www.jstor.org/publisher/ceisejong?refreqid=excelsior
%3A16508aa41587852762dcc6e20f6aa60f