Chapter 8

The five levels of regional economic integration are

(1)free trade area, (2)customs union, (3)common market, (4)economic union, and (5)political union.

Make the case for regional economic integration.

>Political and economic benefits for regional integration are similar to those for global integration. >Regional integration may undermine global integration and lead to some loss of countries' sovereignty.

Explain the evolution of the GATT and the WTO, including current challenges.

>The GATT (1948-1994) significantly reduced tariff rates on merchandise trade. >The WTO (1995-present) was set up not only to incorporate the GATT but also to cover trade in services and intellectual property, settle trade disputes, and provide a peer review of trade policy. >The Doha Round was intended to promote more trade and development but has so far failed to accomplish its goals.

Make the case for global economic integration.

>There are both political and economic benefits for global economic integration. >The biggest expected political benefit is peace. >The three economic benefits of global integration are constructive dispute settlement, streamlined trade policies, and increased worldwide income through job creation and economic growth.

Identify the five organizations that promote regional trade in the Americas and describe their benefits and costs.

Despite initial misgivings, NAFTA has significantly boosted trade and investment among members. The two South American customs unions, the Andean Community and Mercosur, have not been effective, because only a relatively small part of any member's trade is within the union and the region's largest trading partner, the United States, is outside the union.

Globally, the _____ was created in 1948 as a multilateral agreement governing the international trade of goods.

General Agreement on Tariffs and Trade

The Doha Round was suspended because:

Japan, the United States, and the EU refused to reduce farm subsidies.

Which of the following steps will help managers capitalize on opportunities at regional and global levels?

Managers should consider trade politics at the regional level.

Identify the four organizations that promote regional trade in the Asia Pacific and describe their benefits and costs.

Regional integration in Asia Pacific centers on CER, ASEAN, APEC, and TPP. APEC is the largest regional integration by both geographic area and GDP. TPP is a multilateral free trade agreement that is currently being negotiated.

In 2008, Andean Community and Mercosur countries agreed to form the _____.

Union of South American Nations (USAN)

The Doha Round was significant because it:

aimed at promoting economic development in developing countries.

The World Trade organization (WTO) settles trades disputes by:

authorizing winning countries to use tariff retaliation.

German media was against the European Union (EU) becoming a political union as it wanted to:

avoid the burden of paying for other countries' problems.

In the context of the World Trade Organization's (WTO's) trade dispute settlement mechanisms, the losing country:

can defy the WTO ruling by doing nothing and suffer trade retaliation by the winning country.

The European Union (EU) is now a political union.

false

In the context of regional economic integration, the United States is an example of a _____.

political union

Unlike the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO):

has an agreement governing the international trade of services.

Which of the following statements is true of the Doha Development Agenda?

It aimed at slashing tariffs in industries that developing countries might benefit.

Which of the following is a political advantage of global economic integration?

It builds confidence in a multilateral trading system.

Which of the following statements is true of an economic union?

It has all the features of a common market.

Which of the following statements is true of the European Union (EU) today?

It is an economic union.

Which of the following is an advantage of adopting the euro as a common currency for the European Union (EU)?

It reduces currency conversion costs.

From a resource-based view, which of the following steps should managers take to establish a successful enterprise?

Managers should focus more at a regional level.

A _____ is a group of countries that remove trade barriers among themselves.

free trade area (FTA)

Which of the following is a customs union in South America?

Andean Community

The most (in)famous loophole in merchandise trade created through the General Agreement on Tariffs and Trade (GATT) was the _____.

Multifiber Arrangement (MFA)

_____ is a crucial principle in the multilateral trading system.

Non-discrimination

Which of the following changes was brought about by the General Agreement on Tariffs and Trade (GATT) on global trade as a result of the 1970s and 80s recession?

Nontariff barriers were introduced.

_____ is a free trade area (FTA) among Canada, Mexico, and the United States.

North American Free Trade Agreement (NAFTA)

_____, launched in 1983, turned the historic rivalry between Australia and New Zealand into a partnership.

The Closer Economic Relations (CER)

List the accomplishments, benefits, and costs of the European Union.

The EU has delivered more than half a century of peace and prosperity, launched a single currency, and constructed a single market. The EU's challenges include internal divisions and enlargement concerns.

_____ is an example of a free trade area (FTA).

The Eurasian Union

Which of the following was the major contribution of the General Agreement on Tariffs and Trade (GATT) to global trade?

The average tariff on trade in developed economies dropped.

The South East Trading Zone (SETZ) is a monetary union comprising eleven member countries. In this case, which of the following statements is true?

The member countries will integrate political and economic affairs of a region.

Articulate how regional trade should influence your thinking about global business.

Think regional, downplay global. Understand the rules of the game and their transitions at both global and regional levels.

Which of the following is a disadvantage of the General Agreement on Tariffs and Trade’s (GATT’s) policies?

Trade in services and intellectual property (IP) protection was not covered.

_____ has been developing because Asia–Pacific Economic Cooperation (APEC) is too big and too difficult to get anything meaningful done.

Trans–Pacific Partnership (TPP)

In 1957, six member countries of European Coal and Steel Community (ECSC) signed the _____, which launched the European Economic Community (EEC).

Treaty of Rome

The North West Trading Zone (NWTZ) is a free trade area comprising eleven countries in the Moresian continent. The member countries of this free trade area use different currencies. In addition to imposing common external policies, the NWTZ permits the free movement of goods and people. In this case, the NWTZ is a _____.

common market

A _____, one step beyond a free trade area (FTA), imposes common external policies on nonparticipating countries in addition to all the arrangements of an FTA.

customs union

The North Symorian Trade Confederate (NSTC) was established to promote regional economic integration within six countries belonging to the same subcontinent. This free trade area has imposed common external policies on nonparticipants. In this case, NSTC is a _____.

customs union