Which of the following integrations is related to supranational organizational structure?

Correct option is B

An Economic Union represents one of the most advanced forms of regional economic integration and involves a supranational organizational structure. This level of integration not only includes the removal of trade barriers (as in Free Trade Areas and Customs Unions) and the free movement of goods, services, labor, and capital (as in Common Markets), but also harmonizes economic policies (like taxation, monetary, and fiscal policies) and often involves the creation of supranational institutions to enforce and regulate these policies.

The European Union (EU) is a prime example of an Economic Union, where member states have created governing bodies (such as the European Commission and the European Central Bank) with authority that transcends national governments. These bodies make binding decisions in areas of economic policy, making the structure supranational, i.e., above the national level.

Information Booster:

• Economic Union is the highest level of economic integration before full political union.

• It involves standardizing economic policies among member countries.

• Supranational institutions are created to oversee the common economic rules.

• Often includes a common currency, like the Euro in the EU.

• Requires high political commitment and sovereignty sharing.

• Enhances economic stability and policy coordination among members.

• Promotes deeper economic convergence and cohesion.

Additional Knowledge:

(a) Free Trade Area:
This is the first level of economic integration. It involves removing tariffs and quotas between member countries but allows each country to maintain its own trade policies with non-members. No supranational authority exists, as countries retain full control over external policies. Examples: NAFTA (now USMCA).

(c) Common Market:
Goes beyond customs union by allowing free movement of factors of production (labour and capital) among member countries. However, economic policies are still managed nationally, and no supranational authority governs policy alignment. It’s an intermediate step but not fully supranational.

(d) Economic Integration:
This is a generic term describing all forms of economic cooperation among nations—ranging from preferential trade agreements to full economic union. It does not specify any structural level, let alone one with supranational governance.