Question

1. Regional economic integration involves 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. True False

2. The movement toward regional economic integration has been most successful in Asia. True False
3. In a customs union, trade barriers are eliminated among member countries, and each country maintains its own external trade polices with nonmember countries. True False
4. A common market has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members. True False
5. A common market entails even closer economic integration and cooperation than an economic union. True False
6. The European Union is an example of a perfect economic union. True False
7. Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement. True False

Answer 1

1) True - Regional economic integration results in trade agreements. The first measure that those trade agreements usually take is reducing or eliminating tariffs among countries. This is called a customs union and is the most common type of trade agreement in the world, with each continent having several customs union within it.

2) False - Asia does have several trade agreements among different countries, but the continent as a whole is still largely desintegrated. Trade flows between the Middle-East and East Asia have still a lot of room to grow, as well as trade between India and China. It can be argued that by far, the continent that is most economically integrated is Europe, with most of European contries belonging to the European Union customs union.

3) True - As explained before, a customs union is the most common type of trade union, and simply consists in the adoption of common tariffs, or the elimination of those tariffs.

4) True - A common market union is a step ahead of a customs union. It homogeneizes trade policy, regulation policy and production policy among the signing nations. The European Union is a common market union.

5) False - The technical definition of an economic union is the sum of a customs union and a common market, so it cannot be argued that either one of the other entails more market integration.

6) It can be True because the European Union includes common tariffs, common market, common regulations, and even common monetary policy. However, it could also be argued that it is False because it could be integrated even further (for example, fiscal policy could be centralized)

7) True it is difficult to coordinate the interests of many different countries, this is why the World Trade Organization exists (which is not a trade agreement, it's an institution overseeing some fundamental aspects of trade), and also why the TPP (Trans-Pacific Partnership) Trade Agreement ultimately failed.