Kastay, Mr.

Adam
MA-PSM, CPSP(T),BAPSM
a.kastay@yahoo.com
+255766730000
◦ Express the reasons for economic
integrations.
◦ Evaluate benefits of economic
integrations.
◦ Appraise drawbacks of economic
integrations.
◦ Link the benefits and drawbacks with
respect to procurement
 Students to read this topic:
 Reasons, benefits and drawbacks of
EAC, SADC, COMESA, AU, EU, NAFTA.
Link the benefits and drawbacks with
respect to international procurement
 Regional integration is a process in
which neighbouring states enter into
an agreement in order to upgrade
cooperation through common
institutions and rules.
 The objectives of the agreement could
range from economic, political or
environmental.
 Regional economic integration has
enabled countries to focus on issues
that are relevant to their stage of
development as well as encourage
trade between neighbours.
 This unification involves partial or full
abolition of tariff and non-tariff
restrictions on trade taking place
among members countries.
 There are four main types of regional
economic integration.
(1) Free trade area
(2) Customs union
(3) Common market
(4) Economic union/ common currency
 This is the most basic form of
economic cooperation.
 Member countries remove all barriers
to trade between themselves but are
free to independently determine trade
policies with non-member nations.
 An example is the North American
Free Trade Agreement (NAFTA).
 This type provides for economic
cooperation as in a free-trade zone.
 Barriers to trade are removed
between member countries.
 The primary difference from the free
trade area is that members agree to
treat trade with non-member
countries in a similar manner. For
example: the Gulf Cooperation
Council (GCC).
 This type allows for the creation of
economically integrated markets
between member countries.
 Trade barriers are removed, as are any
restrictions on the movement of
labour and capital between member
countries.
 Like customs unions, there is a
common trade policy for trade with
non-member nations.
 The primary advantage to workers is
that they no longer need a visa or
work permit to work in another
member country of a common market.
 This type is created when countries
enter into an economic agreement to
remove barriers to trade and adopt
common economic policies.
 It includes movement of factors of
production and harmonization of
monetary and fiscal policies of the
members countries.
 An example is the European Union
(EU).
 Trade facilitation
 Cross borders production chains
 Increase market size/supplier base
 Free movement increase in wider
supplier research.
 It make easier access market and
technology
 Improve physical links on the
transportation and infrastructure
 Reduce custom clearing and
forwarding procedures
 Creation of trade barrier to non-
member.
 Trade diversion
 Government loose revenue due to free
tariff.
 National treatment and non-
discriminatory.
 Higher operating costs.
 Monetary crisis.