Ch.3 Global Trade Environment
Describe the similarities and differences between a free trade area, a customs union, a common market, and an economic union. Give an example of each.
1. All four forms of economic integration eliminate tariffs and quotas among member nations. 2. At the next level, customs unions, common markets, and economic unions all have common external tariff and quota systems. 3. Common markets and economic unions provide for reducing or eliminating restrictions on people, money, and other factors. 4. An economic union is the most highly evolved form of integration, calling for harmonization of economic policies and institutions. Examples include: free trade area - NAFTA; customs union - EU; common market - Central American Common Market (CACM); economic union - EU.
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The creation of the Single Market in Europe has led to harmonization. What does this mean? How does harmonization affect a company's global marketing strategies?
1. Harmonization: the coming together of varying standards and regulations across countries. 2. Harmonization means that content and other product standards that varied among nations have been brought into alignment. 3. As a result, companies may have an opportunity to reap economies of scale by cutting back on the number of product adaptation. 4.In addition, harmonization can shift marketing strategies from brand to benefit segmentation, standardize packaging and labeling requirements.
What are the criteria for joining the euro zone?
1. The objective of the EU is to harmonize national laws and regulations so that goods, services, people, and eventually money can flow freely across national borders. Members in the euro zone - Austria, Belgium, Finland, Ireland, the Netherlands, France, Germany, Italy, Luxembourg, Portugal, and Spain all use a single currency called the Euro.
Explain the role of the World Trade Organization. Why has the Doha Round of trade talks stalled?
The World Trade Organization (WTO) is the successor to GATT. Based in Geneva, the WTO has a dispute-settlement body (DSB) representing all member countries that mediates trade complaints concerning unfair trade barriers and other issues. During a 60-day consultation period, parties to a complaint are expected to engage in good-faith negotiations and reach amicable resolution of a given issue. Failing that, the complainant can ask the DSB to appoint a three-member panel to hear the case. After convening, the panel has nine months within which to issue its ruling. The DSB is empowered to act on the panel's recommendations. The losing party to a dispute can turn to the seven-member appellate body. If a country's trade policies are found to violate WTO rules, it is expected to change those policies and negotiate compensation via lower tariffs with the winning country. If appropriate changes and compensation are not forthcoming, the WTO can authorize trade sanctions against the loser.
Identify a regional economic organization or agreement in each of the following areas: Latin America, Asia/Pacific, Western Europe, Central Europe, The Middle East, and Africa
Three important trade agreements in Latin America are: 1.Central American Integration System (SICA) 2. Andean Group 3. Southern Cone Common Market (Mercosur). The Asia/Pacific region: home to the Association of Southeast Asian Nations (ASEAN). The European Union (EU) and European Economic Area (EEA) are: the important trading blocs in Western Europe. Further east, the new Central Cooperation Council (GCC) dates back to 1981; newer agreements include: 1. the Arab Cooperation Council (ACC) 2. Arab Maghreb Union Economic Community of West African States (ECOWAS) Elsewhere on the continent 1. Ten-nation South African Development Coordination Conference (SADCC) has existed since 1980.
