Currency Gambling for Forex

FOREX news: focus on the EU integration process

The Euro has been a steady competitor of the US dollars since its creation. Businessmen and traders closely monitor the strength of the Euro over the Dollar every day. Business newspapers report, even with a bit of anxiety, trails of the Euro as it climbs on foreign exchange. Wall Street Journal even reported on Sept 30 "that the Late Friday, the euro was at $1.2681 from $1.2706 late Thursday. The dollar was at 118.12 yen from 117.77 yen, while the euro was at 149.79 yen from 149.64 yen late Thursday. The dollar was trading at 1.2503 Swiss francs from 1.2470 francs, while sterling was fetching $1.8724 from $1.8764 late Thursday." What is with the Euro that is so interesting? To answer that, we shall discuss its origin - the EU or the European Union.

The ultimate goals of the European countries and communities that integrated are political, but the immediate steps are economic. The first step in the economic integration process is the creation of a free trade area in which tariffs among the member states are eliminated. This is supposed to increase trade among member states, but free trade areas can be easily infiltrated. A state outside the organization could simply export goods into the member state with the lowest tariffs. Once that was done, the goods could be exported from the infiltrated member state to the other members of the organization and escape the tariffs of the other states as if they had come from within the free trade area.

An obvious solution to this problem involves the adoption of a common tariff by the states in the organization, to be applied to all imports coming from the outside. If this is accomplished, the organization reaches the status of a customs union.

The nest step up the ladder of economic integration is to establish a common market. In addition to abolishing intraorganization tariffs and creating a common external tariff, a common market allows the components of production - this is, capital and labor - to move freely across national boundaries. Entrepreneurs from one member state can invest without restriction in any other member state, and workers can freely migrate to any state in the organization to find work. If the member states cooperate to the extent that they jointly plan monetary, fiscal, and social policies, they form an economic union. If they turn the planning of these policies over to a unified, supranational body, total economic integration is accomplished.


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