bus 321 ch. 10
political union (forms of economic integration)
-Complete political and economic integration of two or more countries -example: The United States, transformed from 13 separate colonies into one, is an example of this
single european act part of the struggle to create a common market
-Countries that accepted the White Paper signed the Single European Act and adopted its goal of completing the transformation to a common market by the end of 1992. -The goal is known as EC '92. Substantial progress toward meeting the goal in the areas of physical, technical, and fiscal barriers has been made.
customs union (forms of economic integration)
-Eliminates internal trade barriers among its members -Adopts common external trade policies toward nonmembers -Minimizes the trade deflection problem -example: is the Mercosur Accord, an agreement among Argentina, Brazil, Paraguay, and Uruguay. -example is the andean community (south america)
common market (forms of economic integration)
-Eliminates internal trade barriers among members -Adopts a common external trade policy toward nonmembers -Eliminates barriers that inhibit the movement of factors of production among members -combines the elements of a customs union with a policy that allows for the mobility of factors of production. -Productivity is expected to rise in a common market because factors of production are free to locate where the returns to them are highest. -The European Union is an example of a this
The Treaty of Nice from common market to EU
-It continued the integration process by making modest adjustments in the EU's governance arrangements. -the treaty reduced the number of areas where unanimity is required for Council approval -EU members established a Constitutional Convention to resolve these conflicts. Unfortunately, the proposed Constitution was defeated
Central America-Dominican Republic Free Trade Agreement other free trade agreements in the americas
-It reduced tariffs, NTBs, and investment barriers among the United States, El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua, and the Dominican Republic
economic union (forms of economic integration)
-Represents full integration of the economies of two or more countries -Eliminate internal trade barriers -Adopt common external trade policies -Abolish restrictions on the mobility of factors of production among members -Requires its members to coordinate their economic policies -example: is the Belgium-Luxembourg Economic Union. In addition, the European Union is currently moving toward this -members coordinate and harmonize monetary, fiscal and taxation policies
the european union (EU)
-The most important regional trading bloc in the world today is the European Union (EU). With a combined population of 499 million, its the worlds richest markets. -motivated by to promote peace and prosperity through economic and political cooperation. -is the most important trading bloc in the world today. Twenty-five countries currently "belong" to the EU, making it the world's richest market, with a total GDP of $7.9 trillion -example of a regional economic integration -example of a economic union -was established when the maastricht treaty went into effect in 1993
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
-The third challenge for the WTO is intellectual property rights (patents, copyrights, trademarks, and brand names). Efforts, agreed upon at the Uruguay round, to improve intellectual property rights protection have largely failed due to lax enforcement by certain countries. -a WTO agreement regulating intellectual property
most favored nation (MFN) principle
-To ensure that international trade is conducted on a nondiscriminatory basis, GATT follows this -which requires one nation to treat a second nation no worse than it treats any third nation. Any preferential treatment that is extended to one country must be extended to all countries. Thus, the principle implies multilateral rather than bilateral trade negotiations.
Cairns Group
-a group of major agricultural exporters -have pressured the WTO to ensure the Uruguay round policies dealing with agricultural trade are implemented according to schedule.
The Treaty of Amsterdam (aka the Treaty for Europe) from common market to EU
-a strong commitment to attack the EU's high levels of unemployment -a plan to strengthen the European Parliament -the establishment of a two-track system, allowing groups of members to proceed with economic and political integration faster than the EU as a whole.
formally known as the treaty on european union, and informally as the maastricht treaty from common market to EU
-amended the Treaty of Rome -established the economic and monetary union -euro replaced existing national currencies which reduced exchange rate risks and currency conversion costs of firms doing business in the eurozone -rests on three "pillars" designed to further the economic and political integration of Europe. --First is the agreement to create a common foreign and defense policy among member states. --Second is an agreement to cooperate on police, judicial, and public safety matters. --Third are new provisions to create an economic and monetary union among member states to augment the basic European Community agreement. -most important aspect is the establishment of the economic and monetary union (EMU)
the european council
-consists of Heads of state or government from each of the member states, President of the European Council, and President of the European Commission -Convenes twice every six months -Shapes the EU's political priorities and policy agendas -Decisions are usually based on consensus
a free trade area
-eliminates all barriers to trade among member countries, but allows each country to establish its own external trade barriers. -The North American Free Trade Agreement (NAFTA) is an imperfect example of creating it. -comprises a group of countries that remove trade barriers among themselves
world trade organization (WTO)
-has three primary goals: to promote trade flows by encouraging nations to adopt non-discriminatory and predictable trade policies, to reduce remaining trade barriers through multilateral negotiations, and to establish impartial procedures for resolving trade disputes among members -GATT expanded considerably into a multilateral trader system call ____ -
the legislation process
-in the EU, which is usually initiated by the Commission, is a complicated one. In fact, transforming a Commission proposal into law may take years -
Asia-Pacific Economic Cooperation Initiative (APEC) Trade Arrangements in the Asia-Pacific Region
-includes 21 countries from both sides of the Pacific Ocean -response to the growing interdependence of the Asia-Pacific economies.
the european court of justice (governing the EU)-4 organizations
-interprets the meaning of EU law and ensures that EU regulations and policies are followed by member states (insures compliance)
screwdriver plant
-is a factory in which little transformation of a product is undertaken -trade negotiators also made an effort to prevent the establishment of this in Mexico as a means of evading U.S. and Canadian tariffs by developing detailed rules of origin defining whether a good should qualify for preferential tariff treatment or not.
the european commission (governing the EU)-4 organizations
-is composed of 25 individuals whose loyalty is to the EU rather than their home countries. Its mandate is to be "guardian of the Treaties. -proposes legislation -implements treaty provisions -protects the interests of the EU -wields broad implementation powers -administers the EU's bureaucracy
Australia-New Zealand Agreement (ANZCERTA or CER) Trade Arrangements in the Asia-Pacific Region
-it has eliminated tariffs and NTBs between the two countries- Australia and New Zealand -fostered cooperation in marketing, investments, tourism, and transportation.
european free trade association
-its members are Iceland, Liechtenstein, Norway, and Switzerland -the first 3 of these countries have joined with the EU to create a common market known as the european economic area
the european parliament (governing the EU)-4 organizations
-made of 732 elected representatives, is the weakest of the governing bodies. It originally acted in a consultative manner in EU policy making, but has expanded its role under the Maastricht Treaty. -Seats are allocated in rough proportion to a country's population -Gained increased powers over time
Council of the Economic Union (governing the EU)-4 organizations
-made up of 25 members, each of whom is responsible to his or her home government, is the EU's main decision-making body -Because of its composition, the Council reflects the desire of member states to retain national sovereignty and power. -most powerful decision making body -decision making rules: unanimous approval and qualified majority
The Caribbean Basin Initiative (CBI) other free trade agreements in the americas
-overlaps two regional free trade areas: the Central American Common Market and the Caribbean Community and Common Market. -permits duty-free import into the United States of a wide range of goods that originate in Caribbean Basin countries, or that have been assembled there from parts produced in the USA -politically sensitive goods have been excluded from the ____, such as textiles, canned tuna, apparel, and petroleum
Association of Southeastern Asian Nations (ASEAN) Trade Arrangements in the Asia-Pacific Region
-promote regional political and economic cooperation -Its founding members were Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand
north american free trade agreement (NAFTA)
-reduce barriers to trade and investment among Canada, Mexico, and the United States -Over a 15-year time span, tariff walls have been lowered, NTBs have been reduced, and investment opportunities have increased for firms located in the three countries. -Lower Tariffs, Reduce NTBs, and Boost Investments
The Andean Community other free trade agreements in the americas
-resulted from a agreement to promote free trade among Bolivia, Chile, Colombia, Ecuador, and Peru.
"white paper" part of the struggle to create a common market
-the European Commission issued its ______on Completing the Internal Market -it called for accelerated progress on ending all trade barriers and restrictions on the free movement of goods, services, capital, and labor among members.
general agreement on tariffs and trade (GATT)
-the goal of this was to promote a free and competitive trading environment that benefits efficient producers -sponsored international negotiations, called "rounds," to reduce trade barriers (both tariff and nontariff). -a multilateral agreement, created in 1948, governing the international trade of goods. -multifibre arrangement was a direct violation of the principles of ____
The Mercosur Accord other free trade agreements in the americas
-the governments of Argentina, Brazil, Paraguay, and Uruguay -These countries agreed to set common external tariffs and to cut internal tariffs on goods that account for 85 percent of intra-Mercosur trade -Bolivia, Colombia, Chile, Ecuador, Peru, and Venezuela later joined Mercosur as associate members.
The European Economic Community (EEC) (EU)
-was established at the Treaty of Rome in 1957 by six nations (Belgium, France, Luxembourg, Germany, Italy, and the Netherlands). -The goal of it was to create a common market. -The name EU was a result of a name change in 1993. In 1995 Austria, Finland, and Sweden joined the EU. In 2004 Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia joined -Norway and Switzerland are the only major Western European nations that do not belong to the EU.
co-decision procedure part of the legislation process
-was introduced by the Treaty of Maastricht. It is now a permanent part of the Treaty on the Functioning of the European Union (TFEU). -the European Parliament and the Council "co-decide" legislation. In order for the legislation to be enacted, a consensus between the Parliament and the Council must be reached.
Treaty of Lisbon (or the Reform Treaty) from common market to EU
-which adopted many of the governance changes proposed by the Constitutional Convention -Important changes included --creating a full-time President of the European Council --permitting a reduction in the size of the European Commission --strengthening the powers of the European Parliament -also granted national legislatures the formal right to voice concerns about proposed EU legislation. -introduce the EU to the appointment of a long term president of the european council.
doha round
-world trade organizations that began in 2001 -Several contentious issues were slated to be discussed, including agriculture trade, intellectual property rights, and trade in services. -was the only round of trade negotiations sponsored by the WTO to reduce agricultural subsidies, slash tariffs, and strengthen intellectual property protection -frees up trade in services
trade deflection
A problem with free trade areas is the potential for ______ whereby nonmember countries try to avoid trade barriers by initially exporting their products to a member country with low trade barriers, then reexporting the products to a member country with high trade barriers.
benelux nations
Belgium, the Netherlands, and Luxembourg
the international trade of services
GATT is a WTO agreement governing
mutual recognition part of the struggle to create a common market
If one member state determines that a product is appropriate for sale, then all other EU members are also obliged to do so under the provisions of the Treaty of Rome.
The General Agreement on Trade in Services (GATS).
The WTO is also focusing on reducing barriers to trade in services. One approach currently in use is the principle of national treatment, in which a country treats foreign firms the same as it treats domestic firms. The WTO began negotiating a new GATS agreement in 2000, but progress has been slow.
Enforcement of WTO Decisions
The WTO, unlike its predecessor GATT, has more power to punish violators of the WTO rules. Most experts feel that the WTO has been successful in implementing its policies during its first years of existence
schengen area of the EU
a passport free travel zone
trade balancing rules
countries may not require foreign investors to limit their imports of inputs to an amount equal to their exports of local production
domestic sales requirements
countries may not require the investor to sell a percentage of a factory's output in the local market
foreign exchange access
countries may not restrict foreign investors access to foreign exchange
stability growth pact
eurozone participants have agreed to limit their annual government deficits to no moe than 3% of their GDPs
The Southern African Development Community (SADC) African Initiatives
is a free trade area created by 12 African Countries
european central bank
now responsible for controlling the eurozone money supply, interest rates, and inflation.
problem sectors of WTO
one challenge facing them is dealing with sectors of the economy such as agriculture and textiles that most nations protect.
The Economic and Monetary Community of Central Africa (CEMAC) African Initiatives
promotes regional economic cooperation in Central Africa
the european economic area
promotes the free movement of goods, services, labor, and capital among its members
the impact of economic integration on firms
pros: Open Markets of Member Countries, Lower Production and Distribution Costs, Improve International Competitiveness cons: Threaten Less-Efficient Firms, Harms Specific Sectors in the Economy, Favors Powerful Special Interest Groups
Generalized System of Preferences (GSP)
the U.S. follows this to offer developing nations reduced tariffs.
has provisions that allows members to review other members trade policies
the WTO differs form "GATT 1948" in that the WTO
Trade-Related Investment Measures Agreement (TRIMS)
the agreement is a start toward eliminating national regulations on FDI, which may distort or restrict trade. It affects trade balancing rules, foreign exchange access, and domestic sales requirements.
Multifibre Agreement (MFA)
the dismantling of this in 2004 eliminated a complex array of quotas and tariffs on trade in textiles and apparel. However, the surge in textile exports from China has led many countries to impose temporary barriers to protect domestic producers
cohesion fund maastricht treaty
the maastricht treaty created a new _________, a means of funneling economic development aid to countries who per capita GDP is less than 90 percent of the EU average
economic and monetary union (EMU)
the most important aspect of the maastricht treaty is the establishment of ___________, its major task is to create a single currency called the euro to replace the existing national currencies.
The Economic Community of West African States (ECOWAS) African Initiatives
was created by 16 West African countries to promote regional economic cooperation.
harmonization part of the struggle to create a common market
whereby the EC encouraged members to voluntarily adopt common "harmonized" regulations
rules of origin
which detail the conditions under which a good is classified as a member or nonmember good to try to prevent trade deflection.