Economic Union

A trading arrangement that commits participating nations to remove all barriers to trade among their group, to abide by common restrictions on trade with other countries outside the group, to allow unhindered movements of factors of production within the group, and to closely coordinate all economic policies with other participants.

A very good example of an economic union is the European Monetary Union (EMU), where a group of European countries participate in the world economy as one economic unit and operates under one official currency, the euro. The EMU's goal is to create a barrier-free trade zone and to enhance economic wealth by creating more efficiency within its marketplace. In addition, EMU and non-EMU members must agree to many legal requirements in order to trade with the EMU member states.