Economic Integration Agreement Definition

Maliszewska M, Z. Olekseyuk and I. Osorio-Rodarte, March 2018, economic and distributive impacts of a comprehensive and progressive agreement on the Trans-Pacific Partnership: the case of Vietnam. Washington, D.C.: World Bank Group. A “coherence policy” is a must for the sustainable development of economic unions and also for the ownership of the process of economic integration. Historically, the success of the European Coal and Steel Community has paved the way for the creation of the European Economic Community (EEC), which concerns far more than the two sectors of the ECSC. A policy of coherence has therefore been put in place in order to take advantage of another pace of economic unification (coherence) that applies to both economic sectors and economic policies. The implementation of the principle of coherence in the adaptation of economic policies in the Member States of the economic bloc has implications for economic integration. The benefits of economic integration can be divided into three categories: commercial services, employment and political cooperation.

Because economists and policy makers believe that economic integration generates considerable benefits, many institutions are trying to measure the degree of economic integration between countries and regions. The methodology used to measure economic integration generally includes several economic indicators, including trade in goods and services, cross-border capital flows, labour migration and others. The assessment of economic integration also includes institutional compliance measures, such as union membership and the strength of institutions that protect the rights of consumers and investors. Total economic integration includes a single economic market, a common trade policy, a single currency, a common monetary policy and a common fiscal policy, including common tax and social benefit rates – in short, full harmonisation of all policies, tax rates and trade rules. In collaboration with partners such as the WTO and the OECD, the World Bank Group provides information and support to countries wishing to sign or deepen regional trade agreements. In practical terms, WBG`s work is as follows: despite the benefits, economic integration has costs. These can be categorized into two categories: regional trade agreements are multiplying and changing their nature. In 1990, 50 trade agreements were in force. In 2017, there were more than 280. In many trade agreements, negotiations today go beyond tariffs and cover several policy areas relating to trade and investment in goods and services, including rules that go beyond borders, such as competition policy, public procurement rules and intellectual property rights. ATRs, which cover tariffs and other border measures, are “flat” agreements; THE RTAs, which cover more policy areas at the border and at the back of the border, are “deep” agreements. A fiscal union is an agreement to harmonize tax rates, define public sector spending and common appropriations, and jointly agree national deficits or surpluses.

At the beginning of 2012, the majority of EU Member States agreed on a fiscal pact that is a less restrictive version of a comprehensive fiscal union. With increasing economic integration, the complexity of regulation is also increasing. These are a number of rules, enforcement and arbitration mechanisms to ensure that importers and exporters comply with the rules. Complexity has a cost that can compromise the competitiveness of territories in the context of economic integration, as it reduces the flexibility of national policies. The decentralization of economic integration could occur if the complexity and restrictions associated with it, including the loss of sovereignty, are no longer considered acceptable by its members.