Level: SL and HL. Sections marked HL only are for Higher Level students.
Economic integration means countries agreeing to reduce barriers between them. This topic covers the main types of trade agreement, their advantages and disadvantages, monetary union and the role of the World Trade Organization (WTO).
Definition
Economic integration is the process by which countries reduce or remove barriers to the movement of goods, services and factors of production between them, and may coordinate their economic policies.
4.4.1 Preferential trade agreements
Definition
A preferential trade agreement (PTA) gives member countries better access to each other's markets (for example lower tariffs) than non-members receive, for some or all goods.
- Bilateral agreements are between two countries, such as the India–UAE Comprehensive Economic Partnership Agreement (2022) and the India–UK trade agreement signed in 2025.
- Regional agreements are between several countries in a region, such as ASEAN, the South Asian Free Trade Area (SAFTA) and the Regional Comprehensive Economic Partnership (RCEP), which India chose not to join in 2019.
- Multilateral agreements involve many countries, typically negotiated through the WTO, where tariff cuts apply to all members.
🔒 Also in the full notes
- 4.4.2 Trading blocs: free trade areas, customs unions and common markets
- 4.4.3 Advantages and disadvantages of trading blocs
- 4.4.4 Monetary union
- 4.4.5 The World Trade Organization (WTO)
- Exam practice: 5 questions with mark allocations
- 2 exemplar answers with full model answers and examiner commentary
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