BUS 187 Ch 9

Treaty of Rome

(1957) the European Community was established. The name changed again in 1993 when the European Community became the EU following the ratification of the Maastricht Treaty.

CARICOM

A customs union was to have been created in 1991 between the english speaking Caribbean countries under the auspices of the Caribbean community. Established in 1973; however, it repeatedly failed to progress toward economic integration.

European Free Trade Association (EFTA)

Established in January 1960, it currently joins four countries -- Norway, Iceland, Liechtenstein, and Switzerland -- down from seven in 1995 (three members, Austria, Finland and Sweden joined the EU on Jan. 1, 1996). Emphasizes free trade of industrial goods.

Maastricht Treaty

Feb. 1992, EC members signed this which committed them to adopting a common currency by Jan. 1, 1999.

Central American Common Market

In the early 1960s, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua attempted to set this up. It collapsed in 1969 when war broke out between Honduras and El Salvador after a riot at a soccer match between teams from the two countries.

Association of Southeast Asian Nations (ASEAN)

Includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. Laos, Myanmar, Vietnam and cambodia have all joined recently, creating a regional grouping of 500 million people with a combined GDP of some $740 billion

Common Market

Has no barriers to trade among member countries, includes a common external trade policy, and allows factors of production to move freely among members.

Caribbean Single Market and Economy (CSME)

In early 2006, this was established by members of CARICOM, and it modeled on the EU's single market, it's goal is to lower trade barriers and harmonize macroeconomic and monetary policy between member states.

Andean Community

Largely based on the EU model, but was far less successful at achieving its stated goals. (Bolivia, Chile, Ecuador, Columbia, and Peru)

North American Free Trade Agreement (NAFTA)

Trade agreement centralized around the US, Canada, and a Mexico.

Free Trade Area

All barriers to the trade of goods and services among member countries are removed.

Court of Justice

Comprised of one judge from each country, and is the supreme appeals court for EU law.

Political Union

A central political apparatus coordinates the economic, social, and foreign policy of the member states.

Regional Economic Integration

Agreements among countries in a geographic region to reduce, and ultimately remove, tariff and nontariff barriers to the free flow of goods, services and factors of production between each other.

European Parliament

As of 2012 has 754 members, and is directly elected by the populations of the member states. Meets in Strasbourg, France, and is primarily a consultative rather than legislative body.

Customs Union

Eliminates trade barriers between member countries and adopts a common external trade policy.

Trade Creation

Occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area. It may also occur when higher-cost external producers are replaced by lower-cost external producers within the free trade area.

Trade Diversion

Occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area.

Mercosur

Originated in 1988 as a free trade pact between Brazil and Argentina. The modest reductions in tariffs and quotas accompanying this pact reportedly helped bring about an 80 percent increase in trade between the two countries in the late 1980s.

European Council

Represents the interests of member states. Clearly the ultimate controlling authority within the EU because draft legislation from the commission can become EU law only if the council agrees.

European Commission

Responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states.

Optimal Currency Area

Similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate an an instrument of macroeconomic policy.

Central America Free Trade Agreement (CAFTA)

The aim is to lower trade barriers between the US and the six countries for most goods and services.

Economic Union

The free flow of products and factors of production among member countries and the adoption of a common external trade policy, but it also requires a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

Treaty of Lisbon

The power of the European Parliament was increased, making it the coequal legislator for almost all European laws.

European Union (EU)

The product of two political factors: (1) the devastation of western Europe during two world wars, and the desire for a lasting peace, and (2) the European nations' desire to hold their own on the world's political and economic stage.