IB 303 Chapter 9

Customs Union

A group of countries committed to (1) removing all barriers to the free flow of goods and services between each other and (2) the pursuit of a common external trade policy. Eliminate trade barriers between member countries and adopts a common external trade policy § Desire even greater economic integration Ex: Andrean Community, which establishes free trade between member countries and composes a common tariff on products imported from the outside.

Economic Union

A group of countries committed to (1) removing all barriers to the free flow of goods, services, and factors of production between each other, (2) the adoption of a common currency, (3) the harmonization of tax rates, and (4) the pursuit of a common external trade policy. ex:EU

African Continental free trade agreement

Accelerating intra-African trade and boosting Africa's trading position in the global market by strengthening Africa's common voice and policy space in global trade negotiations. initially requires members to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the continent. The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022.

free trade

All barriers to the trade of goods and service among member countries are removed Each country is allowed to determine its own trade policies with regard to nonmembers Ex: EFTA, was founded by Western European countries, emphasis has been on free trade in industrial good and agriculture was left out of the arrangement. And free to determine the level of protection applied to goods coming from outside EFTA.

Lisbon Treaty - Article 50

Gave EU members a way to leave the EU

United Kingdom

Great Britain and Northern Ireland

Hard Brexit

Leaving the EU quickly with no restrictions other than a new free trade agreement. Import taxes on goods and services.

European Commission

Responsible for proposing EU legislation, implementing it, and monitoring compliance the "police"

Brexit

The possible British Exit from the European Union

European Council

Ultimate decision-making body, passes laws

Political Union

a central political apparatus coordinates economic, social, and foreign policy ex: United States because its independent states are effectively combined into single nation under the government

Triparte

a government with three parts trying to improve infrastructure within nations and push toward industrialization

Common Market

a group of countries that acts as a single market, without trade barriers between member countries.§ No barriers to trade § Included external trade policy § Allows factors of production to move freely among members § Labor and capital free to move § This type of market demand a significant degree of harmony and cooperation on fiscal, monetary, and employment polices

trade bloc

a group of countries that work together to promote trade with one another ex:NAFTA

Schengen Agreement

a treaty which led to the creation of Europe's Schengen Area, in which internal border checks have largely been abolished.

Regional Trade Agreements

agreements among three or more countries in a region to reduce barriers to trade among themselves ex:trans specific partnership with 11 other pacific rim countries

Court of Justice

interpretation/application of EU treaties · One judge from each country · Act as independent officials

Schengen Area

is an area comprising 26 European countries that have officially abolished all passport and all other types of border control at their mutual borders. The area mostly functions as a single jurisdiction for international travel purposes, with a common visa policy

Soft Brexit

keep things as they are now continued movement of goods and people

Treaty of Rome

the 1957 treaty that established the European Community.· Called for common policies among nation of free trade Creation of a common market

no

true or false do all EU members use the Euro?

terrorism think they are contributing too much money to the EU don't want to be responsible for financial issues like Greece

what are some reasons why UK does not want to be apart of the EU?

European commission European Parliament European Council Court of Justice

what are the 4 EU Administrative bodies?

nontariff barriers like Infrastructure, bureaucracy, corruption economy, mobility,

what are the challenges of Africa's trading blocs?

§ Firms facing significantly improved competition § Exports less competitive-consider FDI

what does the trade creation and trade diversion look outside a trade bloc?

§ Firm's market expands! § New trade rules means expanding supply chains, increased competitiveness § Impacts firm structure and operating strategy § A lot more competition pushes firms to improve, innovate & increase efficiencies § Consumers win!

what does the trade creation and trade diversion look within a trade bloc?

competitive pricing increased efficiency addition opportunities Antitrust issues

what is the EUs impact on business?

TTIP (Transatlantic Trade and Investment Partnership)

§ Between US and EU § Cover pharmaceuticals, cars, energy, finance, chemical, clothing, food and beverage § Reduce tariffs (currently average around 3%) § Reduce regulatory barriers (harmonize) § Meeting EU and US regulatory requirements is expensive for firms § Food standards are a sticking point § Genetic modification, pesticides, growth hormones, poulty

Bilateral Agreement

§ Country to country or country to a group of countries, usually about tariff reductions § Ex: EU and Japan or NAFTA (us Mexico and Canada)

RCEP (Regional Comprehensive Economic Partnership)

§ Mega-deal! § 15 Asia-Pacific countries (started with 16, India backed out) § ASEAN nations + 5 major trading partner § Japan, China, South Korea, Australia and New Zealand § Different because it doesn't consider environment workers rights, IP, doesn't try to incur globalization of economies (its okay to be stated owned companies). Different than all other arrangements

APEC

§ Not a regional trade agreement, an informal forum of a member economy. Only group if nations that refers to its member of member economies. Must have border along pacific ocean. § Not a regional trade agreement § Inter-governmental forum focused on § Sustainable economic growth and prosperity, economic ties, investment and free trade § 21 "member economies" § 43% of world trade § 55% of global GDP § Big and powerful, but...

ASEAN (Association of Southeast Asian Nations)

An international organization linking together the 10 most important countries of Southeast Asia.§ Regional grouping that is very powerful and rich § Basic objective of is to foster free trade among member countries and to achieve cooperation in their industrial policies however progress has been limited § Progressing toward a free trade zone § Trade between China a these members more than tripled during the first decade of the 21st century and this agreement should spur further growth

European Parliament

Elected EU body that consults on issues proposed by European Commission, legislative power, budget control, supervises executive decisions (more consultative)

AfCFTA

o Numerous trade blocks- not too much trade. § Progress toward the establishment of meaningful trade blocs has been slow § Significant political turmoil has presently impeded any meaningful progress o Can be hard to establish free trade areas because of the deep suspicion of free trade exists § Countries in less developed and less diversified economies ended to be protected by tariff barriers from unfair foreign competition

Mercosur

§ Organized as a free trade pact between Brazil and Argentina § Modest trade reductions in tariffs and quotas helped increase trade between the two which encourage the expansion of this free trade pact § Venezuela was suspended in 2012 for violating the pact democratic principals and engaging in widespread human right violation § GOAL: establish a full free trade area by end of 1994 and a common market § Criticism included that Mercosur countries might not be able to compete globally once the group's external trade barrier come down § Slump in 1998 when states slipped into a recession § Since 2010 Mercosur has made little forward progress, and there is debate if it will become a fully functional customs union

Treaty of Masstricht

§ The establishment of the euro § Pros: lower costs, easier price comparison, more efficient, increased liquidity § Cons: nations lost control of monetary policy, challenging to deal with national differences in wages, taxes, business cycles, growth rates, etc.

CTTP

§ relaunched (after US pulled out) § 11 members (no US or China) § Japan led negotiation efforts § 13% of global GDP (down from 40%) § Removes tariffs on about 95% of goods § How does this impact the US? § Slashed tariffs among the other nations, which means US is now a disadvantage. Our beef industry is very high.