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1、Chapter 6Economic IntegrationChapter Structure1. Forms of Economic Integration2. Static Welfare Effects of Customs Union 2.1 Trade Creation Effect 2.2 Trade diversion Effect3. Dynamic Welfare Effects from Customs Union4. History of Attempts at Economic Integration1. Forms of Economic IntegrationPref

2、erential trade arrangements Free trade area Customs union Common market Economic union Removing trade barriersHarmonizing trade policiesAllowing free movement of endowmentsHarmonizing fiscal and monetary policiesFTACUCMEUChapter Structure1. Forms of Economic Integration2. Static Welfare Effects of C

3、ustoms Union 2.1 Trade Creation Effect 2.2 Trade diversion Effect3. Dynamic Welfare Effects from Customs Union4. History of Attempts at Economic Integration2. Static Welfare Effects of Customs UnionAdministration savingsMuch more bargaining power Trade creation effectTrade diversion effect2.1 Trade

4、Creation EffectCustoms UnionCommon Tariff: 3$/bushelBritainFranceU.S8$/bushel 6$/bushel4$/bushelBritain Tariff: 5$/bushelTrade creation occurs when some domestic production in a nation that is a member of the customs union is replaced by lower-cost imports from another member nation.What is Trade Cr

5、eation Effect?Illustration of Trade Creation86 进口2.1 Trade Creation EffectCustoms UnionCommon Tariff: 3$/bushelBritainFranceU.S8$/bushel 6$/bushel4$/bushelBritain Tariff: 3$/bushelTrade diversion occurs when lower-cost imports from outside the customs union are replaced by higher cost imports from a

6、 union member.2.2 Trade Diversion EffectWhat is Trade Diversion Effect?86472.2 Trade Diversion EffectIllustration of Trade DiversionChapter Structure1. Forms of Economic Integration2. Static Welfare Effects of Customs Union 2.1 Trade Creation Effect 2.2 Trade diversion Effect3. Dynamic Welfare Effec

7、ts from Customs Union4. History of Attempts at Economic Integration3. Dynamic Welfare Effects from Customs UnionIncreased competitionEconomies of scale Stimulus to investment Better utilization of economic resourcesChapter Structure1. Forms of Economic Integration2. Static Welfare Effects of Customs

8、 Union 2.1 Trade Creation Effect 2.2 Trade diversion Effect3. Dynamic Welfare Effects from Customs Union4. History of Attempts at Economic Integration4. History of Attempts at Economic IntegrationEuropean Union (EU)North American Free Trade Agreement (NAFTA)Organization of Asia-Pacific Economic Coop

9、eration (APEC)Economic cooperation of East AsiaEuropean Union1958-1968, Customs Union1968-1992, Common market 1992-now, Economic Union NAFTA1965-1989, FTA of U.S. and Canada1990-1994, NAFTAAPEC1989-1993, preparation1993-1996, programming and action1997-now, adjustmentEconomic Cooperation of East Asia Impact of U.SFunction of JapanBig gap on developmentChapter Structure1. Forms of Economic Integration2. Static Welfare Effects of Customs Union 2.1 Trade Creation Ef

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