The issue of trade liberalization has been the key element within the
process of  European economic integration ever since the 1950s. In
particular it was a  controversial matter to make the strategic choice
of creating a customs union   rather than a free trade area. Discuss
the positive and negative welfare effects of   economic integration in
Europe by analyzing, among others, the following  topics:
 
§	 What are the static and dynamic effects of trade liberalization in
a customs union?
§	 Under what specific conditions are the static effects i)large, and
ii) positive?
§	 Why are the static effects not as important as the dynamic effects
of economic integration?
§	 Why might free trade areas cause lower trade diversion than customs
unions?
§	What countries would benefit most from forming a free trade area