Efectos comerciales de los acuerdos regionales y los procesos de integración económica en Europa, América del Sur y América del Norte
| Autor | Oscar David Lopez/Alexander Carvajal |
| Cargo | Saint Thomas University, Colombia/Saint Thomas University, Colombia |
| Páginas | 32-48 |
Latin American Journal of Trade Policy 8 (2020) – ISSN 079-9668 – Universidad de Chile
32
The Trade Effects of Regional Agreements and Economic Integration
Processes in Europe, South America, and North America
Oscar David Andrés Julián López Camargo*
Alexander Carvajal**
Abstract
This article seeks to understand the effects of trade creation and diversion in regional agreements and
integration processes in Europe, South America, and North America. Through a systemic literature
review, and based on the economic theory of integration, it analyzes the impact of tariff barriers on
trading volume through the world, as well as the impact of barriers removals in member and non-member
countries that participate in these trade agreements. As hypothesis, it can be stated that the trade effects
generated by economic integration processes vary depending on the endogenous conditions of the
industries in member countries, in addition to the consolidation phase of the integration processes. For
this purpose, a qualitative descriptive methodology, based on an analysis of literature, is used to determine
the trade creation and deviation effects of agreements in Europe (European Union), South America
(MERCOSUR and CAN), and North America (NAFTA).
Keywords: International trade, economic integration, trade creation, trade deviation, trade agreements
Resumen
Este artículo busca comprender los efectos de creación y el desvío de comercio producidos por los
acuerdos regionales y los procesos de integración en Europa, América del Sur y América del Norte. A
través de una revisión de la literatura, y con base en la teoría económica de la integración, se analiza el
impacto de las barreras arancelarias en el volumen de comercio en todo el mundo, así como el impacto
de la eliminación de barreras en países miembros y no miembros que participan en estos acuerdos
comerciales. Como hipótesis, se puede plantear que los efectos comerciales que generan los procesos de
integración económica varían en función de las condiciones endógenas de las industrias en los p aíses
miembros, además de la fase de consolidación del proceso de integración. Para ello, se utiliza una
metodología descriptiva cualitativa, basada en un análisis de la literatura, para determinar los efectos de
desviación y creación de comercio de acuerdos en Europa (Unión Europea), América del Sur
(MERCOSUR y CAN) y América del Norte (TLCAN).
Palabras clave: Comercio internacional, integración económica, creación de comercio, desviación de
comercio, acuerdos comerciales.
JEL classification: F1, F15.
* Lecturer and researcher from Saint Thomas University, Colombia. Master in Foreign Affair s. Email:
oscar.lopezc@usantoto.edu.co. Received: July 14th, 2020; modifications: October 15th, 2020; accepted: December
30th, 2020.
** Lecturer and researcher from Sa int Thomas University, Colombia. Master in Applied Statistics. Email:
Alexander.carvajal@usantoto.edu.co
Oscar David Andrés Julián López Camargo & Alexander Carvajal
The Trade Effects of Regional Agreements and Economic Integration Processes in Europe, South America, and North
America
33
Introduction
Both, economic integration processes1 and trade agreements, are characterized primarily by the political
benefits they generate in member countries; though, they also generate economic costs. In contrast,
unilateral trade liberalization possesses lower economic costs but do not generate political benefits. This
difference helps explain why the majority of countries prefer to opt for economic integration to achieve
specialization and efficiency in the allocation of resources, thus achieving welfare gains in member
countries. However, all economic integration processes can generate two outcomes regarding trade flows
at the international level. One the one hand, trade diversion, which is understood as a reduction in
international trade flows when a country replaces imports from a third -non-member- party with imports
from a member country at a higher price, reducing international trading volume. On the other hand, trade
creation understood as the replacement of higher cost imports from a third country with imports from a
member country at a lower cost, generating an increase in global trade flows. Economic integration
processes must constantly face this dichotomy, which directly impacts the welfare of the societies
involved in integration processes. Moreover, there is no clear explanation about the success on some
regional agreements in terms of trade flows and how others regional agreements decrease trade flows.
Hence, is fundamental to approach the most significant regional agreements in Europe, South America,
and North America to achieve a better comprehension on the conditions and the influence of the stages
of each economic integration processes, that affects trade flows in these regional agreements. Thus, this
papers looks into the following research question: What are the trade effects generated by economic
integration processes in Europe, South America, and North America? As hypothesis, it can be stated that
the trade effects generated by economic integration processes vary depending on the endogenous
conditions of the industries in member countries. This is in addition to the consolidation phase
experienced by member countries in integration processes given that trade creation effects can exceed
those of trade diversion, increasing international trading volume. Additionally, the nature of the
agreements, together with the commitment of member countries, can alter the trade effects resulting
from regional agreements.
The general objective of this article is to review the trade effects of economic integration processes in
Europe, South America, and North America. To do so, it is necessary to analyze not only the nature of
preferential trade agreements and regional agreements, but also the influence of the endogenous
conditions in each trade area. Additionally, the trade effects of tariff and non-tariff barriers in regional
agreements must be studied. Finally, the effects of trade creation and diversion in customs unions and
free trade agreements must also be analyzed.
1 Economic integration may be understood as the process of removing progressively all the trade discriminations
(tariff and non-tariff barriers) within an area among member countries. However, for this art icle, it is necessary to
add that an integration economic process should follow linear stages of economic associati on model, from a free
trade area to a full economic integration.
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