Economic integration is the establishment of a unified economic area where consumers and producers of different nations transact freely in a single market. Using the experience of the European Union, this essay offers a bird’s–eye view of the trade–offs encountered when supranational structures pursuing collective objectives of integration may infringe on national sovereignty. The range of issues examined include: (A) Determination of policy with multiple veto players. (B) The advantage and disadvantages from centralising policy making. (C) The welfare effects of a customs union from changing the flows of trade and factors of production across different countries. (D) The costs and benefits from adopting a single currency and its consequences for budgetary policy.