Reference no: EM132968093
Regional Economic Integration (REI) is a process in which neighboring states enter into an agreement in order to enhance cooperation through common institutions and rules. Intra regional trade refers to trade which focuses on economic exchange, primarily between countries of the same region or economic zone. REI has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbours. There are four main types of REI namely Free Trade Area (FTA), Customs Union, Common Market, Economic Union and Political Union. The complexity of the REI increases as we move from FTA to a Political Union. The ASEAN Free Trade Area (AFTA) [1] is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries. When the AFTA agreement was originally signed in 1992, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises the ten countries of ASEAN. The European Union (EU) is an international organization comprising 28 European countries and governs common economic, social, and security policies. The EU was created by the Maastricht Treaty, in 1993. The treaty was designed to enhance European political and economic integration by creating a single currency (the euro), a unified foreign and security policy, and common citizenship rights by advancing cooperation in the areas of immigration, asylum, and judicial affairs. The EU was awarded the Nobel Prize for Peace in 2012, in recognition of the organization's efforts to promote peace and democracy in Europe. Given the developments in international business it is possible for REIs to enhance their cooperation and solidarity by strengthening their collaboration to include several common goals.
If AFTA member countries were to adopt the EU model, discuss with examples of any FIVE (5) major challenges that AFTA could face.