Related to the: Good Side of Economic Integration

Economic integration refers to the process of unification of economic policies through the removal of trade tariffs. This is meant to ensure the free movement of people, goods, services, and capital, enact and maintain common policies on trade, agriculture and regional development and lower prices for distributors and consumers. This is to increase the combined economic productivity of the states and better the standards of living for the citizens of the member states.

Despite this noble reason for integration, there are several disadvantages of economic integration.

Since the tariffs on trade would have been removed and the preferential trade area will be in existence, member states will be inclined to source imports from fellow member states even if the cost of importation is higher than in other non-member states. This leads to trade diversion. For instance, a nation would have to bring to a halt trade along with less priced imports from a non-member nation and deal with a member nation where the imports may have a superior price.

Another disadvantage is that integration could lead to the establishment of a trading bloc that discriminates goods and services from nations outside the bloc. This could lead to trade barriers towards nations with which member states previously engaged in trade with.

Another disadvantage is that member countries may have to give up the control of some policies such as fiscal, monetary and trade policies. This loss of national sovereignty increases as the level of regional integration increases from a preferential free trade area to a monetary union to a common market and eventually to complete political and economic integration.

With this knowledge it’s now up to you the reader to decide whether you are for or against integration.