4.4 Economic integration

• Preferential trade agreements can be bilateral, regional, or multilateral

• The World Trade Organization is the key multilateral trade institution

• Trading blocs include free trade areas, customs unions, and common markets

• They increase integration between member economies

• Advantages include wider market access, economies of scale, labour mobility, stronger bargaining power, political stability, and cooperation

• Disadvantages include loss of sovereignty and challenges to multilateral trade negotiations

• Monetary union is a deeper form of economic integration

• The WTO has objectives and functions linked to trade rules and negotiations

• WTO influence is affected by difficulty reaching agreement on services and primary products

• Unequal bargaining power between members affects WTO influence