The amalgamation of economic policies among various states through the full or partial elimination of tariff and non-tariff restraints on trade that take place among them before their integration is known as Economic integration.
It is an economic arrangement among various regions aiming at the elimination or reduction of trade barriers and the management of fiscal and monetary policies. The purposes of economic integration include reduction of costs for both producers and consumers, and to increase trade among the countries that take part in the contract.
There are a variety of economic integration levels. They include free trade areas (FTA), preferential trade agreements (PTA), common markets, customs unions, and monetary and economic unions. The trade barriers vanish with the economies becoming more and more integrated. Political and economic coordination among the member countries also surges due to economic integration. .
Integration of economies of two or more states results in diminishing of short-term benefits arising due to tariffs and the other trade barriers. Simultaneously, the governments of the member countries become lesser and lesser powerful in making adjustments aimed to benefit themselves with the economies getting more integrated. Being integrated, a country can be lead to greeter long-term benefits in times of economic growth. however, an economy can get worse and worse while being integrated in times of poor growth.
The North American trading bloc or the North American Free Trade Agreement originated as a free trade agreement among Canada and the United States. This Agreement created a free trade area extending to the Arctic Circle from the Rio Grande. This agreement is said to be the largest mutual trade relationship. The time when U.S. and Canada were shaping the U.S./Canada FTA, Mexico was restructuring its style to international trade.