Chapter 9 Regional Economic Integration

Trade dversion

occurs when higher cost suppliers within the free trade area replace lower cost external suppliers

Why should countries integrate their economies?

1All countries gain from free trade and investment 2 countries become more dependent on each other, less conflict

European PArliament

Debates legislation proposed by the commission and forwarded to it by the council

European has two trade blocs

EU with 27 members European Free trade area EFTAwith 4 members

What limits eforts at integration?

Economic integration can be difficult because while a nation as a whole may therefrom a regional free trade agreement certain groups may lose it implies a loss of national sovereignty Regional economic integration is only beneficial if the amount of trade it creates exceeds the amount it diverts

The main institution in the European Union

European council, european commission, european parliament, court of justice

What are the levels of regional economic integration?

Free trade area, customs union, common market, economic union,

What is the STatus of Economic Integration in the Americas?

There is a move toward a greater regional economic integration in the Americas NAFTA is the biggest effort Other efforts include the andean community and MERCOSUR Hemisphere wide free trade of the Americas is under discussion

Norht American Free Trade ARea

abolishes tariffs on 99% of the good traded between memebrs 2 removed barriers on teh cross border flow of services 3 protects intellectual property rights 4 remove......

REgional economic integration

agreements between countries in a geographic region to reduce tariff and non tariff barriers to the free flow of goods, services, and factors of production between each other

Single European Act

committed the EC countries to work toward establishment of a single market by december 31 1992 was born out of frustration among ec memebrs that the community was not living up to its promise Provided the impetus for the restructuring of substantial sections of european industry allowing for even faster economic growth.

maastricht treaty

committed the EU to adopt a single currency ( created the second largest currency zone in the world after that of the U.S. dollar)

free trade area

eliminates all barriers to the trade of goods and services among member countries (EFTA, NAFTA)

customs union

eliminates trade barriers between member countries and adopts a common external trade policy

common market

has no barriers to trade between member countries , a common external trade policy and the free movement of the factors of production and labor

Politcal union

involves a central political apparatus that coordinates the economic, social, and foreign policy of member states

Costs of the Euro

loss of control over national monetary policy EU is not an optimal currency area

Should the EU continue to expand?

many countries have applied for EU membership. Ten countries joined in 2004 expanding the EU to 25 states In 200, Bulgaria and Romania joined Turkey has been denied over concerns of human rights.

trade creation

occurs when low cost producers within frthe free trade area replace high cost domestic producers

European Commission

responsible for propsing eu legislation implementing it and monitoring compliance with EU laws by member states

benefits of the euro

savings from having to handle one currency 2. it is easier to compare prices across europe so firms are forced to be more competitive 3. gives a strong boost to the development of highly liquid pan European capital market 4. increases the range of investment options open both to individuals and institutions

TReaty of rome?

the European economic community was formed by them with the goal of becoming a common market

economic union

the free flow of products and factors of production between members, a common external trade policy a common curency , a harmonized tax ate, and a common monetary and fiscal policy (EU)

Court of Jusice

the supreme appeals court for EU law

European council

the ultimate controlling authority iwhthin the EU