page_title: Economic integration
section_title: Stages
hierarchical_section_title: Economic integration / Stages
caption_attribution_description: English: orange - WTO and no FTAs, light green - bilateral FTAs only, dark green - multilateral FTA/CU/CM/EMU/etc.
context_page_description: Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff and non-tariff restrictions on trade.
  The trade-stimulation effects intended by means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the "second best" option for global trade where barriers to full free trade exist.
  Economic integration is meant in turn to lead to lower prices for distributors and consumers with the goal of increasing the level of welfare, while leading to an increase of economic productivity of the states.
context_section_description: The degree of economic integration can be categorized into seven stages:
  Preferential trading area
  Free-trade area
  Customs union
  Single market
  Economic union
  Economic and monetary union
  Complete economic integration
  These differ in the degree of unification of economic policies, with the highest one being the completed economic integration of the states, which would most likely involve political integration as well.
  A "free trade area" (FTA) is formed when at least two states partially or fully abolish custom tariffs on their inner border. To exclude regional exploitation of zero tariffs within the FTA there is a rule of certificate of origin for the goods originating from the territory of a member state of an FTA.
  A "customs union" introduces unified tariffs on the exterior borders of the union (CET, common external tariffs). A "monetary union" introduces a shared currency. A "common market" add to a FTA the free movement of services, capital and labor.
  An "economic union" combines customs union with a common market. A "fiscal union" introduces a shared fiscal and budgetary policy. In order to be successful the more advanced integration steps are typically accompanied by unification of economic policies (tax, social welfare benefits, etc.), reductions in the rest of the trade barriers, introduction of supranational bodies, and gradual moves towards the final stage, a "political union".
     [partial] — [substantial] — [none or not applicable]
caption: Free trade around the World:
    Multilateral free trade agreements or more advanced agreements   Bilateral free trade agreements  advanced agreements   No free trade agreements, but World Trade Organization members
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