Ch 5: Trading Areas & agreements
The NATO was expanded in
-1952, adding Greece and Turkey. Five of the fourteen members of NATO were also members of the ECSC (indicated with flags). -expanded again in 1955, adding West Germany -The next expansion of NATO was in 1982, adding Spain.
1951: The European Coal and Steel Community(ECSC).
-Focus: one-industry free trade organization. -was created with six members, five of which were already members of NATO (indicated with the flags). -The power to make decisions about the coal and steel industry was placed in the hands of an independent, supranational body called the "High Authority".
The North Atlantic Treaty Organizationwas created in
1949 It focused on the military integration of Europe and a perceived threat from the Soviet Union. NATO is a mutual defense treaty
NAFTA: A Very Brief History
1965 Auto pact Agreement - A one industry free trade agreement with Canada ● 1966 Maquiladora Agreement - Geographically specific "FTA" with Mexico 1988 US- Canada FTA - covers all U.S. - Canada trade 1994 NAFTA - Mexico added to US-Canada FTA
Exchange-rate curbs
A global first. Enforceable rules to deter countries from artificially weakening their exchange rates to gain trade advantages.
TRADING AREAS - FREE TRADE AREA of the AMERICAS
All the states that are active members of the OAS (34) are participants in the negotiations to create the Free Trade Area of the Americas. The OAS is the Organization of American States and it includes all North and South American countries except Cuba.
Federalization of the EUROPEAN UNION: Draft Constitution
An effort to create a stronger central government * Signed in 2004 * Ratification process halted in 2005 (France and Holland voted NO). * A revised treaty was then signed in 2007, and took effect in 2009 without the ratification process used before. * It is called: The Treaty of Lisbon
EUROPEAN UNION: A Brief History
For centuries Europe has been the scene of frequent and bloody wars. Between 1870-1945, France and Germany fought three times to devastating effect. European leaders came to the conclusion that the only way to secure a lasting peace between their countries was to unite them economically, politically and militarily. After WW II, institutions were formed that paved the way for the creation of the European Union. Two of these were NATOand the ECSC.
There are five EU institutions, each playing a specific role:
Legislative Roles: European Parliament (elected by the people of the Member States, 736 members, approx375 million voters); council of the European Union(representing the governments of the Member States); Executive Roles: european council (collective presidency, heads of member states); European commission (executive body, 27 reps., proposes legislation); Judiciary Roles: court of justice (ensures compliance with the laws);
EUROPEAN UNION
Originally, the members of the European Parliament were chosen by member governments. In 1979,direct elections were held. Citizens of the member states voted for European parliament candidates. Since then, direct elections have been held every five years. The Treaty of Maastricht (1992) introduced further integration (e.g., "justice and home affairs") and effectively created the European Union(EU). -During the 1990s it became increasingly easy for people to move around Europe as passport and customs checks had been abolished at most of the EU's internal borders.
Picking up from TPP
President Trump pulled the U.S. out of the Trans-Pacific Partnership. That pact attempted to write new rules for the digital economy. The USMCA replicates many of the TPP digital chapters. It also gives banks something they lobbied for and failed to get with TPP—a provision banning "data localization" requirements by countries that force global banks to keep servers in each country where they do business.
U.S. Trade Agreements
The United States has free trade agreements in force with 17 countries. These are: Australia Honduras Bahrain Israel Canada Jordan Chile Mexico Costa Rica Morocco Dominican Republic Nicaragua El Salvador Oman Guatemala Peru Singapore The United States has signed free trade agreements with Colombia,South Koreaand Panama, but they have not been sent to Congress for ratification yet.
EU Origins
These same six countries decided to integrate other sectors of their economies. In 1957 they signed the Treaties of Rome, creating the European Atomic Energy Community (EURATOM) and the European Economic Community (EEC). The member states also started removing trade barriers among them and made plans for a "common market". In 1967, as a result of the Treaty of Brussels, the institutions of the three European communities merged. It was from this date onwards that one Commission, one Council of Ministers and a European Parliament came into operation.
Dispute resolution
Trump administration wary of systems that can overrule the U.S. government. * Investor-state dispute settlement, or ISDS—has been scaled back * Canada successfully fought to keep an arbitration system Chapter 19 o NAFTA) that allows challenges U.S. (or other's) duties on allegedly dumped or subsidized.
NAFTA Results
U.S. exports to Canada and Mexico grew from $134.3 billion($46.5 billion to Mexico and $87.8 billion toCanada) to$ 230.2 billion to Canada and 134.1billion to Mexico ● Mexican exports to the United States reached over $134 billion, while Mexican exports to Canada grew from $2.7 billion to $8.7billion, (an increase of almost 227%) ● Canada's exports to NAFTA partners increased in value.
Tariff reviews
Under its agreement last month, Mexico would be protected from the brunt of any national-security tariffs the Trump administration is considering on vehicles and auto parts, and Canada got a similar deal.
The Treaty of Maastricht(1992)
created the European monetary union (EMU) and in 2002 the introduction of the Euro managed by a European Central Bank. Euro national currencies in all but three of the 15 EU countries at that time (Great Britain, Sweden and Denmark).
Sunset clause
in 16 years, if not actively renewed or renegotiated. The three countries would meet every six years to decide whether to renew the pact, potentially keeping Nafta-pocalypse 16 years in the future in perpetuity.
The euro is now the currency of
twelve European Union countries: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland. It is likely that other EU countries that are not part of the EMU will adopt the euro as their currency in the future
NAFTA Issues
•AGREEMENT ON TRADE, INVESTMENT & JOBS -NO TARIFFS BY 2005 - •THE ENVIRONMENT ("side agreements" e.g., the North American Development Bank) • •PROCEEDURES (e.g., CERTIFICATES OF ORIGIN) • •435 million people with a $14 TRILLION GDP (1/4 of world total) •All three countries had to ratify the treaty ("fast track" authority only).
TRADING AREAS - MERCOSUR
•Argentina, Brazil, Paraguay and Uruguay -Chile by extension agreement •Signed by 4 initial members 1/1/1991 -Immediately eliminated tariffs on 90% of the goods traded within the bloc -Exceptions were phased out in 1999 •Established an average common external tariff of 14% on 85% of the goods imported from nonmembers
Types of Trade Agreements
•Arrayed by Degrees of Cooperation -Free Trade Area •No internal barriers for merchandise around group -Customs Union •common external barriers -Common Market •no barriers labor & capital -Economic Union •full integration of social and economic policies -Political Union •full integration of governance foreign & defensive policy, etc
Summary & Implications of Trade Agreements
•Benefits of trade -Marketers benefit from new markets opening and smaller markets growing -Consumers benefit by increased access to goods and services from around the world •Trade Barriers = Marketing Challenge -Barrier Effects •Barriers raise prices for products •Place limits on how much non-members can sell
The Treaty of Lisbon
•Changed from unanimity to qualified majority in the Council of Ministers •Power of EU Parliament increased •Member states now have legal right to leave the EU Opponents argued: Centralized too much power Supporters argued: Provided more checks and balances
TRADING AREAS - ANDES COMMUNITY
•Columbia, Ecuador, Bolivia, Peru
Trade Agreements
•These patterns are both a cause of regional trade agreements and a result of regional trade agreements. • •Trade agreements have significantly increased trade activity among many trade partners. • •Differences among trade agreements reflect levels of commitments and cooperation among the countries involved.
