Regional Economic Integration

It ensures the nations involved in the agreement focus on issues that were relevant to development and trade. There are four types of such policies – 

The free trade area allows the member countries to remove all barriers to trade where the business entities are free to determine trade policies with non-members. One of the examples of such trade is NAFTA.

There are certain custom unions where the restrictions remain with the members and the only difference is that they trade with a non-member similarly. 

The common market system provides regulations for the creation of integrated economics of financial markets between the countries as the restrictions on the movement of labour and capital are eliminated.

The key advantage of such provisions is that the workers no longer require the consent of the regional government to work in another country.  

Like the custom unions, there are policies for trade that is created when countries enter an economic agreement to eliminate restrictions and adopt shared economic policies.

Such a system can be found in the EU which creates the system of common tax between two or more nations. 

Pros and Cons

Pros

The platform creates a scenario where the consumer gets low-cost products without the extra tariffs and it also supports labour movement and gives job opportunities.

Member nations find it easy to agree with a smaller number of countries and it promotes political cooperation.

Cons

It leads to trade diversion where the nations may operate more with each other than with non-members, which may lead to increased business with lesser efficiency or expensive producer. 

It also indicates employment shifts and reductions where the countries may produce cheap labour markets. Further, such collaborations can lead to a loss of national sovereignty where one country’s loss can create risks for all the others.