International Marketing Ch 4
Determinants of Economic and Political Integration
Among the determinants of economic and political integration are: A common culture. A shared history. Regional proximity. A similar level of economic development
Impediments to Economic and Political Integration
Among the impediments to economic and political integration are: Differences in culture and history. Physical distance. Differences in level of economic development. National concerns regarding loss of sovereignty. A history of conflict.
Free Trade Agreements: Asia
Association of Southeast Asian Nations (ASEAN) Most successful example of regional economic integration in Asia. Has its goal to reduce tariffs and create an environment promoting mutual involvement in the development of the region with a goal of creating a free trade area. Member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam
General Agreements: Bilateral and Multilateral Forums and Agreements
Bilateral and multilateral agreements can be industry-specific or involve some or all products exchanged between countries. They are less formal in nature than free trade agreements, and they are not as stable as the other forms of integration. Bilateral Agreements Limited to two countries Multilateral Forums and Agreements General agreements between multiple countries. Typically, they are industry specific. Examples: OPEC NATO Asia-Pacific Economic Cooperation Commonwealth of Independent States
Central American Common Market (CACM)
CACM has plans for forming a regional economic union similar to the European Union. Member countries: Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama
European Parliament
Consists of members elected by direct universal suffrage with representation allocated among member states based on their population. Debates the policies and legislation in the European Union.
Council of Nations
Consists of representatives from parliaments of member countries of the EU and acts as constitutional council that has the power to overrule the Court of Justice.
Free Trade Agreements: Europe
Countries reduce and, eventually, eliminate trade barriers on all goods and services traded between them. Example: European Free Trade Association Member countries: Iceland, Liechtenstein, Norway, and Switzerland. At present EFTA is not an official part of the European Union.
European Monetary Union (also known as Euroland
Created by the 1992 Maastricht Treaty. Has a common monetary policy. Has an active European Central Bank. Uses the Euro as the common currency. Members of the European Monetary Union are: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain.
Andean Common Market (Andean Community)
Eliminated trade restrictions within the Andean region, while providing for uniform external tariffs and rules for foreign investment. Member countries are: Bolivia, Colombia, Ecuador, and Peru.
European Central Bank
Enacts the monetary policy for the countries that are members of the European Monetary Union. Maintains price stability within the European Monetary Union.
Latin American Integration Association
Established in 1980, it comprises the countries of Latin America. It replaced the Latin American Free Trade Association, a failed attempt to create a free trade association that would have comprised all of Latin America. Member countries: Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela.
Common Market
Establishing a common market involves: Eliminating all tariff and non-tariff barriers to trade. Adopting common external tariffs, and allowing for free movement of capital and labor within the common market. The European Union reached this stage before establishing a monetary and political union.
Customs Union
Free trade agreement that adopts common external tariffs on products imported from outside the area. Customs unions eliminate or greatly reduce all trade restrictions for member countries, and usually have in place mechanisms to create a common market. Example: South African Customs Union: Member countries: Botswana, Lesotho, Namibia, and Swaziland.
European Court of Auditors
In charge of controlling sound and lawful management of the EU budget
European Union
Member states: Austria, Belgium, Bulgaria, the Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. Croatia, Macedonia and Turkey are candidate countries.
Monetary Union
Monetary Unions require a unified monetary policy for member countries. A monetary union involves, among others: The creation of a unified, parastatal central bank. The use of a single currency, or currencies that are in a fixed relationship to each other
Free Trade Agreements: Americas (2)
North American Free Trade Agreement (NAFTA) The goal of NAFTA is to eliminate tariffs and nontariff barriers and to offer free access to companies from member countries to a single market. Member countries: Unites States, Canada, and Mexico. Free Trade Area of the Americas (FTAA) Ambitious plan to create a market of 800 million people and an annual production worth $11 trillion in the current decade. Derailed, as current focus is on developing Mercosur in South America. Member countries: the 34 democratic nations of North, Central, and South America.
West African Economic and Monetary Union
One of the first attempts at economic integration in Africa Adopted a single currency - the CFA franc. Has not been very successful in promoting trade within the union. Member countries: Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo.
Southern Cone Common Market (MERCOSUR)
One of the most successful common markets Member countries: Brazil, Argentina, Paraguay, Uruguay and Venezuela, with associate members Bolivia, Chile, Ecuador, and Peru.
Common Market for Eastern and Southern Africa (COMESA)
Plans full economic integration in the near future; however, it faces substantial obstacles due to the political and economic instability in the region. Member countries include: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe
Free Trade Agreements: Africa
Southern African Development Community (SADC) Free trade agreement promoting economic cooperation among 14 of Africa's more affluent countries. Member countries: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Seychelles, the Republic of South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe.
Economic Community of West African States
Strives to achieve complete economic integration and to address impediments to the integration process caused by political unrest and lag in economic development of the region. Member countries: Benin, Burkina Faso, Cap Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.
European Court of Justice
The European Union's equivalent of the United States Supreme Court. The final court of appeals. Can overrule decisions of the national courts.
Council of Ministers
The decision-making body (legislature) of the European Union. Composed of one minister from each member country. Passes laws based on proposals of the European Commission.
European Commission
The executive body of the European Union. Subordinated to the European Council. Consists of a president and commissioners who are in charge of initiating and supervising the execution of laws and policies. Answers to the European Parliament. Acts only on behalf of and in the interest of the European Union, and not that of individual member states.
Political Union
The highest level of regional integration. Assumes a viable economic integration and involves the establishment of viable common governing bodies, legislative bodies, and enforcement powers. The European Union is the only example of successful voluntary political integration
European Council
The highest policy-making body of the EU, it consists of heads of member-countries' government
Levels of Regional Economic and Political Integration
political union monetary union common market free trade agreement general bilateral/multilateral agreement
