European Union:

An economic union, which is the deepest form of economic integration, adds to a common market the need to harmonize a number of key policy areas. One of the most notable aspects of economic unions is the need to officially coordinate monetary and fiscal policies as well as the labor market, regional development, transportation and industrial policies. Since all countries would essentially share the same economic space, it would be counter-productive to operate divergent policies in those areas. An economic union commonly includes the use of a common currency and a unified monetary policy. Eliminating exchange rate uncertainty improves the functioning of an economic union by allowing trade to follow economically efficient paths without being unduly affected by exchange rate considerations. The same is true of business location decisions. Supranational institutions would be required to regulate commerce within the union to ensure uniform application of the rules. These laws would still be administered at the national level, but countries would abdicate individual control in this area. The establishment of an economic union, which entails a common currency and/or the harmonization and unification of monetary, fiscal and social policies, follows this step. An example of an economic union is the Economic and Monetary Union within the EU. An economic union typically will maintain free trade in goods and services, set common external tariffs among members, allow the free mobility of capital and labor, and will also relegate some fiscal spending responsibilities to a supra-national agency. The European Union's Common Agriculture Policy (CAP) is an example of a type of fiscal coordination indicative of an economic union. Countries committed an Economic Union agree to establish/operate a Common Market. Critical to this is the free movement of labor, harmonize monetary policy among themselves, coordinate fiscal policy to achieve sound management of the economic space, harmonize trade policies and establish rules to regulate and promote competition within the shared economic space.