Transcript Regional Economic Integration Chapter 8

Ch.6: International Environment:
Regional Political & Economic
Integration
© The McGraw Hill Companies, Inc., 2000
Levels of Economic Integration
Political
Economic Union
NAFTA
Common Union
Free Customs Market
Union
Trade
Area
EU 1992
© The McGraw Hill Companies, Inc., 2000
Economic Case for
Regional Integration
Stimulates economic growth in countries
Countries specialize in those goods and
services efficiently produced.
Additional gains from free trade beyond
international agreements such as GATT and
WTO.
© The McGraw Hill Companies, Inc., 2000
Political Case for
Economic Integration
Economic interdependence creates incentives
for political cooperation and reduces potential
for violent confrontation.
Together, the countries have the economic
clout to enhance trade with other countries or
trading blocs.
© The McGraw Hill Companies, Inc., 2000
Political World Map
© The McGraw Hill Companies, Inc., 2000
Regional Economic Integration
Agreements among countries in a
geographic region to reduce, and ultimately
remove, tariff and nontariff barriers to the
free flow of goods, services and factors of
production among each other.
© The McGraw Hill Companies, Inc., 2000
The European Union [EU]
© The McGraw Hill Companies, Inc., 2000
© The McGraw Hill Companies, Inc., 2000
Map
European Union and the US
(April, 1998)
Europe*
USA
Population (mm)
300
267.7
% of World GDP
19.4%
19.6%
% of World Trade
18.6%
16.6%
2.4%
3.8%
- 2.8%
0
GDP Growth
Budget Balance
as % of GDP
*Countries likely to be part of common currency: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, Netherlands, Portugal and Spain.
© The McGraw Hill Companies, Inc., 2000
EU Governance
European Council
Heads of State
and
Commission
President
European Commission
Resolves policy issues
Sets policy direction.
20 Commissioners
appointed by
members for
4 year terms
Proposing,
implementing,
monitoring legislation.
Council of Ministers
European Parliament
630
directly
elected
members
1
representative
from each
member
Propose amendments to
legislation, veto power
over budget and singlemarket legislation,
appoint commissioners.
© The McGraw Hill Companies, Inc., 2000
Ultimate controlling authority.
No EU laws w/o approval.
Court of Justice
1 judge
from each
country
Hears
appeals of
EU Laws.
© The McGraw Hill Companies, Inc., 2000
Map
North American Free Trade
Agreement
Became law: January 1,1994
Over 15 year period:
tariffs reduced (99% of goods traded)
NTBs reduced
investment opportunities increased
Protects intellectual property
Applies national environmental standards
Special treatment for many industries
© The McGraw Hill Companies, Inc., 2000
Andean PACT
© The McGraw Hill Companies, Inc., 2000
Map
ANCOM: Andean Pact
Bolivia, Colombia, Ecuador, Peru,
Venezuela
Cartagana Agreement, 1969. One of oldest
still in existence
Population: 97 mm (14% of hemisphere)
GNP: $122.6 billion
Changed from FTA to customs union in
1992
© The McGraw Hill Companies, Inc., 2000
Mercosur
© The McGraw Hill Companies, Inc., 2000
Map
The Mercosur Accord
1988: Argentina, Brazil. 1990: Paraguay,
Uruguay
1995: Agreed to move toward a full
customs union.
Population: 209 mm (27% of hemisphere)
GNP: $656.6 billion (8% of hemisphere)
Trade doubled in first 3 years
© The McGraw Hill Companies, Inc., 2000
Other Hemisphere Associations
Central American Common Market
CARICOM
Free Trade Area of the Americas
© The McGraw Hill Companies, Inc., 2000
ASEAN
© The McGraw Hill Companies, Inc., 2000
Association of Southeast Asian
Nations
Created in 1967
400 million citizens
Economic, political and social cooperation
Brunei, Indonesia, Malaysia, the
Philippines, Singapore, Thailand and
Vietnam.
© The McGraw Hill Companies, Inc., 2000
© The McGraw Hill Companies, Inc., 2000
Map
Asia Pacific Economic
Cooperation
Founded in 1989 to ‘promote open trade
and practical economic cooperation’.
‘Promote a sense of community’.
18 members
GDP: $13 trillion (1995)
50% of total world income
40% of global trade
© The McGraw Hill Companies, Inc., 2000