Now while there is a costs and benefits angle, consider the element of quality and global standards when it comes to quality. A regional agreement that is signed between two countries would likely not contribute too much standardization. It can logically be inferred that two countries that trade within themselves would be less likely to work competitively on their products and produce quality. Since tariffs are cancelled between them anyways, it could so happen that the emphasis on quality as it happens in the context of international competition would be missing. Cost based advantage already exists for product and the companies within the countries might not want to focus on the quality based advantage.
More states would be interested in joining such a gathering. The form of costs reduction that can be achieved for buyers is hence greater here, as it is not just one country but all countries that trade with the local country that is included in this agreement. This form of a custom union can have long term benefits, or alternatively it could have some hazards. Consider for instance, how this could lead to a highly exploitive state. Countries that have signed for free trade and other countries end up paying no barrier tax and this means that the local country loses out in terms of some form of an income. Additionally, since the barrier to entry is low, competitive companies from these countries would end up having better bases in the local countries, and local companies might get wiped out of existence. This form of a custom union form of arrangement works better when the local country does not have any industries or high profile trade that is competing with the countries with which it signs the agreement. It could work with countries that are economically lesser when compared to the countries with which it trades under the custom union.
The common market style of regional economic agreement is formulated based on the free trade model, but greater cost savings are planned for. Here, in addition to the removal of the trade barrier, the member states also avail themselves of benefits in unrestricted movement of capital and labour between themselves. A common trade policy also exists with other non-member nations (Cohn, 2012). The unrestricted movement in capital and labour gives the companies either of many opportunities for taking advantage of within their member nations. Much long-term planning in regional trade and surplus could be arranged. In terms of costs and benefits, this arrangement has more of a vision. With increasing global participation, the competitive advantages for a nation lie in how its industries are able to control costs. Where there are no regional trade agreements, the workers will be forced to seek a work visa or a permit in order to work within another country. There would be much more costs incurred in setting up the work zones and more. However, the regional agreements help cut short these costs. The common market in eastern and southern Africa COMESA is an example here. This is a form of agreement where it is defined among peers. All countries here are more or less on the same economical rating. This is a form of agreement that ensures better labour costs reduction and there is more mutual goodwill between such nations. The economic union is yet another form of integration where countries enter into specific economic agreements.
States join to form regional economic agreements in order to avail of the benefits of working together. Where competitive landscapes are created in the global economy, local regions have to come together to solve their mutual problems and help create opportunities for better trade and improved economy. Regional integration in helping them control costs assists in achieving this benefit in economy.