Chapter 9

Under the Andean Pact, which two members received special concessions based on the size of these countries? Chile Bolivia Ecuador Colombia Peru

Bolivia Ecuador

In 1969, which countries created the Andean Pact that was modeled on the EU, but was not as successful in achieving regional groups objectives?

Bolivia, Chile, Colombia, Ecuador, Peru

Which of the following best explains why some thought the European Union (EU) would be better off without Britain?

Britain was seen as taking a "me first" approach rather than a "what's best for the whole" approach.

Which three long-term members of the EU were NOT receptive to the euro as a common currency as set forth by the Maastricht Treaty?

Denmark Great Britain Sweden

Select the most appropriate trade pact for each description. 6. Council of Ministers is composed of government ministers from each member.

EU

Select the most appropriate trade pact for each description. 8. Includes France and Germany

EU

Which of these trade unions is made up of European countries that decided NOT to be part of the European Community and emphasized free trade in industrial goods?

European Free Trade Association

How did President Trump react to the two multilateral trade agreements, the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership, which were being pursued by the Obama administration?

He pulled the United States out of these negotiations.

Proponents of NAFTA argued many would benefit from the movement of low-skilled, labor-intensive production to ______, which might have a competitive advantage in this area.

Mexico

Select the most appropriate trade agreement for each description. Agreement ratified by all three countries and went into effect January 1, 1994.

NAFTA

Select the most appropriate trade agreement for each description. Environmental and job loss fears did not materialize.

NAFTA

Select the most appropriate trade pact for each description. 1. United States President Donald Trump claimed that this agreement did not benefit all members equally. He threatened to pull the United States out if more favorable terms were not reached.

NAFTA

Select the most appropriate trade pact for each description. 9. Opposition to this agreement believed there would be a mass exodus of jobs from the United States and Canada into Mexico.

NAFTA

The new trade deal in North America called USMCA by Donald Trump is a revision of the North American Free Trade Agreement (NAFTA). What was the initial impetus for NAFTA?

NAFTA was designed to eliminate barriers to trade among member countries thereby creating a larger and more efficient productive base for the entire region.

______ is considered the most successful attempt at regional economic integration.

The EU

One political reason for economic integration is the potential to minimize violent conflict between nations.

True

The USMCA prohibits duties on music and ebooks.

True

Proponents of NAFTA believed that it would result in

U.S. and Canadian consumers benefiting from lower prices.

Which of the following is most likely if the United States-Mexico-Canada Agreement (USMCA) is approved in member countries?

U.S. automakers will have to source more inputs within the bloc for vehicles to qualify as tariff-free.

Select the most appropriate trade agreement for each description. A new agreement reached in 2020 to replace an existing agreement between the same countries.

USMCA

Select the most appropriate trade agreement for each description. Raises threshold for automakers to qualify for zero tariffs. Under agreement, automakers must produce 75% (up from 62.5%) of a vehicle's content in North America.

USMCA

Select the most appropriate trade pact for each description. 11. An updated version of an existing trade agreement that includes new provisions for local content requirements for automakers and more open dairy trade.

USMCA

Select the most appropriate trade pact for each description. 12. The terms of the agreement will require minimum wages for auto workers in one bloc-member country to triple.

USMCA

Which statement best describes the response by EU members to the introduction of the euro as a common currency?

While many members accepted the euro, several long-term members did not.

The European Stability Mechanism was established by the EU to create _____.

a permanent bailout fund

When an optimal currency area exists, similar underlying structures of economic activity make it more feasible to adopt _____.

a single currency

The Maastricht Treaty committed EU members to

adopt a common currency by January 1, 1999.

If the proposed Regional Comprehensive Economic Partnership (RCEP) is successful at removing tariffs on cross-border trade between member countries

all member countries would stand to benefit, although the benefits may not be equally distributed.

A(n) __________ has no barriers to trade among member countries, includes a common external trade policy, and allows factors of production to move freely among members, but does not have a common currency.

common market

An argument against regional free trade agreements contends that the benefits have been oversold, but ______ have often been ignored.

costs

The United States-Mexico-Canada Agreement (USMCA) retains much of the framework of the North American Free Trade Agreement (NAFTA) but with some changes especially in trade in automobiles. For U.S. consumers, the USMCA

could significantly increase the cost of a new car.

Regional _____ integration creates agreements among countries in a specific geographic area in order to reduce and eventually remove tariff and nontariff barriers to the free flow of goods.

economic

If the proposed Regional Comprehensive Economic Partnership (RCEP) is achieved, it will rival the European Union (EU) when measured by the number of countries involved and their combined gross domestic product (GDP). The EU is an example of a(n)

economic union.

The goal of NAFTA was to

eliminate tariffs on trade between the nations.

The Association of Southeast Asian Nations was formed with the intent to foster _____.

free trade

If it is approved by legislators in member countries, the United States-Mexico-Canada Agreement (USMCA) will replace the existing North American Free Trade Agreement (NAFTA). Which level of regional economic integration best describes NAFTA?

free trade area

Which level of regional economic integration best describes the new free trade agreement in North America currently referred to as USMCA?

free trade area

While the terms of the Regional Comprehensive Economic Partnership (RCEP) are still being negotiated, if the agreement achieves just a(n) __________ status, all barriers to the trade of goods and services among member countries will be removed.

free trade area

The Single European Act abolished restrictions on cabotage, which is the

right of foreign truckers to pick up and deliver goods within another member state's borders.

Donald Trump's decision to pull out of negotiations for the Trans Pacific Partnership (TPP) motivated negotiators to come to terms on the Regional Comprehensive Economic Partnership (RCEP). Trump's actions could

shut U.S. companies out of RCEP markets if RCEP becomes a trade fortress.

The number of votes a country gets in the European Council is related to the Multiple choice question.

size of the country.

A key impediment to economic integration is that although a majority of citizens may benefit from free trade, certain groups may lose their jobs to low-cost and low-skilled labor in other countries as was the experience of some U.S. and Canadian workers in the ______ industry following the establishment of NAFTA.

textile

Review each product description and select whether it represents trade creation or trade diversion. United States imports cheaper textiles from Mexico because Mexico belongs to United States-Mexico-Canada Agreement (USMCA).

trade creation

Review each product description and select whether it represents trade creation or trade diversion. United States imports sugar from Canada and not Mexico even though both countries belong to USMCA.

trade creation

Some economists argue that regional free trade agreements will provide global benefits only if

trade creation exceeds trade diversion.

Review each product description and select whether it represents trade creation or trade diversion. Canada imports computer chips from the United States (a USMCA partner), even though China exports them at a cheaper rate.

trade diversion

Review each product description and select whether it represents trade creation or trade diversion. Chile imports cocoa from Mexico. It then enters the Andean Pact and changes its cocoa imports to Colombia (and Andean Pact member).

trade diversion

Review each product description and select whether it represents trade creation or trade diversion. France imports solar panels from Spain (an EU partner) even though Australia offers a better price.

trade diversion

The United States imports sugar from several nations. If the NAFTA agreement caused the United States to import sugar only from Canada, even though it cost more to do so, it would be an example of

trade diversion.

After the British government formally notified of its intent to exit the European Union, the country had _____ to negotiate the terms of the exit.

two years

The collapse of the Central American Common Market was a result of ______.

war between Honduras and El Salvador

The trade pact developed in 1988, initially between Argentina and Brazil, is called ______.

Mercosur

Review each of the milestones surrounding regional economic integration in Europe and then put them into the correct chronological order. Britain leaves the European Union Austria, Finland, and Sweden join the EU European Coal & Steel Community is formed The Treaty of Rome Great Britain, Ireland, and Denmark join the EC Bulgaria, Romania, and Croatia join the EU The EC becomes the European Union Single European Act becomes law

1. European Coal & Steel Community is formed 2. The Treaty of Rome 3. Great Britain, Ireland, and Denmark join the EC 4. Single European Act becomes law 5. The EC becomes the European Union 6. Austria, Finland, and Sweden join the EU 7. Bulgaria, Romania, and Croatia join the EU 8. Britain leaves the European Union

Before the United Kingdom decided to exit the EU, how many total countries were involved by 2014?

28

Free trade agreements account for nearly ____ of regional economic agreements.

90 percent

Select the most appropriate trade pact for each description. 2. This group signed a free trade agreement with China that removes tariffs on 90% of traded goods.

ASEAN

Select the most appropriate trade pact for each description. 7. There has been limited progress to foster free trade under this agreement.

ASEAN

Select the most appropriate trade agreement for each description. 1. Far less successful than the UE, it had all but collapsed in the 1980s. Some growth was seen after adoption of free market economic policies. Negotiations on the creation of a free trade area are proceeding at a very slow pace.

Andean Community

Select the most appropriate trade agreement for each description. Venezuela joined at one point but has since withdrawn.

Andean Community

Select the most appropriate trade pact for each description. 10. A signed agreement in 1969 was based on the EU model.

Andean Community

Select the most appropriate trade pact for each description. 5. Customs Union

Andean Community

Mercosur is a free trade pact started in 1988 by which two South American economies? Peru Colombia Argentina Brazil

Argentina Brazil

What are two impediments to establishing economic integration? Potential to increase violent conflict Concerns over national sovereignty Costs of integration Global benefits of free trade

Concerns over national sovereignty Costs of integration

Select the most appropriate trade agreement for each description. After an earlier attempt failed following a war between two participants, a new impetus came in 2003 when the United States signaled its intention to enter into bilateral trade negotiations with the group.

CAFTA

Select the most appropriate trade agreement for each description. Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic are at the core with an invitation for the United States for bilateral talks.

CAFTA

The 25-year-old NAFTA agreement is set to be replaced with a new agreement, the USMCA. Which countries belong to NAFTA and, going forward, the USMCA?

Canada, Mexico, and the United States

Which countries belong to the agreement referred to as USMCA by Donald Trump?

Canada, Mexico, and the United States

The euro was established because a _____ currency would make it easier for Europeans to compare prices.

Common

What are three forms of economic integration? Common market Full political union Free trade area Military alliance Planned economy

Common market Full political union Free trade area

What are two requirements countries must take to qualify for EU membership? Establish stable democratic government Increase inflation rates Stop deregulation of markets Respect human rights

Establish stable democratic government Respect human rights

What two political factors led to the development of the European Union? Europe's desire to hold its own on the world's political and economic stage. Europe's need for a common language and culture. Europe's desire to assist its former colonies. The devastation of western Europe during the two world wars.

Europe's desire to hold its own on the world's political and economic stage. The devastation of western Europe during the two world wars.

Which institution has a monopoly in proposing European Union legislation?

European Commission

What are the four main institutions responsible for determining economic policy in the EU? European Commission Court of Justice United Nations European Parliament House of Lords Council of the European Union G20

European Commission Court of Justice European Parliament Council of the European Union

In the political structure of the European Union, the ______ is composed of one representative from the government of each member state, but the membership varies depending on the topic being discussed.

European Council

Because of its economic and political influence, the _____ is considered the most significant trading bloc in Europe.

European Union

One of the reasons the European Union was originally formed was because Multiple choice question.

Europeans desired a lasting peace after enduring two devastating world wars.

While the NAFTA agreement provided many protections, it failed to include protections for intellectual property.

False

The political structure responsible for economic policies in the EU consists of a single office known as the Court of Justice.

False, it consists of 4 main institutions

Critics say that the EU is an optimal currency area which is why it is difficult to adopt a single currency.

False, the EU is not considered an optimal currency area

Select the most appropriate trade pact for each description. 3. In 2016 Venezuela was suspended for violating this pact's democratic principles and engaging in widespread human rights violations.

MERCOSUR

Which three nations are a part of ASEAN? Indonesia Mexico Philippines Brazil Singapore Argentina

Indonesia Philippines Singapore

Which two political factors support the idea for economic integration of nations through trade? It provides an incentive to use military action to achieve objectives. Interdependency among nations decreases the potential for violent conflict. It can enhance the political weight of those countries in the world. It promotes independent political power.

Interdependency among nations decreases the potential for violent conflict. It can enhance the political weight of those countries in the world.

Select the most appropriate trade pact for each description. 4. Recession troubles in 1998 led to greater downfall of this agreement.

MERCOSUR

What committed EU members to adopt a common currency by January 1, 1999?

Maastricht Treaty

What are two characteristics of the European Central Bank? It does not set interest rates across the euro zone. It is meant to be free from political pressure. It responds to political pressure from key EU players. It was established to ensure price stability.

It is meant to be free from political pressure. It was established to ensure price stability.

Select the most appropriate trade agreement for each description. Paraguay and Uruguay became members in March 1990, and in 2006, Venezuela joined but has yet to be fully integrated.

MERCOSUR

Select the most appropriate trade agreement for each description. Trade between the four core members quadrupled between 1990 and 1998, but recession created major problems.

MERCOSUR

Which two Mexico-based industries were granted special protection from foreign direct investment under NAFTA? Healthcare Railway Energy Agriculture

Railway Energy

What are three advantages of regional market integration that can result in cost savings to a business? Simplified tax regimes Increased tariff barriers Harmonized product standards Implementation of varied currencies Free movement of goods across borders

Simplified tax regimes Harmonized product standards Free movement of goods across borders

Why is the announcement of the new trade agreement, referred to as USMCA by Donald Trump, so important for companies like Renault?

The new agreement reduces uncertainty about trade in the region allowing firms to make strategic decisions.

Which fundamental element of a political union did the European Union (EU) lack as a result of Britain's decision to opt out of provisions such as the EU Charter of Fundamental Rights, the Schengen Agreement, and the Eurozone?

The willingness of countries to give up sovereignty for the benefit of all.

The Treaty of Maastricht and the Treaty of Lisbon were indications of __________ within the European Union (EU).

greater political union

There has been a(n) _____ in regional economic integration in the past two decades.

increase

The creation of a single market creates _____ costs of doing business.

lower

It was acknowledged that one potential effect of NAFTA was that member countries would take advantage of ______ by moving production efforts to Mexico.

lower labor costs

African countries have attempted to form a continental trade agreement, but have been stymied by significant ______ turmoil.

political

In its current state, the European Union (EU) can best be characterized as being at which level of economic integration?

political union

The banking union and harmonized tax rules that have been adopted by Eurozone members are indicators of which level of economic integration?

political union

Based on economic theories, free trade is viewed as a ______ as all participating nations stand to gain.

positive-sum game

The Single European Act was put in place in an attempt to

remove all impediments to the formation of a single market.