Transcript Regional Economic Integration

Regional Economic
Integration
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• Define each level of regional integration
• Identify the potential effects of integration
• Discuss European integration and enlargement
• Characterize integration efforts in the Americas
• Identify why integration in Asia is unique
• Discuss integration in the Middle East and Africa
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Regional Economic Integration
Process whereby countries in a
geographic region cooperate to either
reduce or eliminate barriers to the free
flow of products, people or capital
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Levels of Regional Integration
• Free-Trade Area
- Remove all barriers to trade among members, but each country
has own policies for nonmembers
• Customs Union
- Remove all barriers to trade among members, and set a common
trade policy against nonmembers
• Common Market
- Remove all barriers to trade, labor and capital among members,
and set a common trade policy against nonmembers
• Economic Union
- Remove barriers to trade, labor and capital, set a common trade
policy against nonmembers, and coordinate members’ economic
policies
• Political Union
- Coordinate aspects of members’ economic and political systems
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Effects of Integration
Potential benefits
- Trade creation
- Greater consensus
- Political cooperation
- Creates jobs
Potential drawbacks
- Trade diversion
- Shifts in employment
- Loss of sovereignty
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European Union (EU)
Pop: 455 million
GDP: $9.3 trillion
Members: 25
Economic Union
Began: 1951
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European Union: Early Years
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European Coal and Steel Community (1951): Removed trade
barriers in coal, iron and steel
European Economic Community (1957): Outlined and took
initial steps toward common market
European Community (1967): Expanded to other industries
including atomic energy
European Union (1994): Final name change and reduced
barriers further
Additional milestones:
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Single European Act (1987): Harmonized regulations, strived for
lower barriers
Maastricht Treaty (1991): Single currency targets, outlined
eventual political union
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Five Key EU Institutions
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European Parliament
Court of Auditors
Court of Justice
Council of the European
Union European Commission
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Business in Central Europe
• Don’t rush familiarity
• Build relationships
• Find a Czech partner
• Expect limited resources
• Hire local professionals
• Establish who’s in charge
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European Union Enlargement
Future members must meet
Copenhagen Criteria
- Stable institutions of human rights,
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democracy, and law
Functioning and capable market economy
Assume economic, monetary, and political
obligations
Adopt rules of Community, Court of
Justice, and Treaties
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European Free Trade Association
Iceland, Liechtenstein, Norway, Switzerland
- Feared lost sovereignty
- Feared destructive rivalry
- Desired free-trade gains
- Cooperates with EU
Pop: 12 million
GDP: $410 billion
Members: 4
Free-Trade Area
Began: 1960
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North American
Free Trade Agreement
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US-Canada (CAFTA) 1989
US-Canada-Mexico (NAFTA)
Trade in many goods, services
Complicated rules of origin
Effects still fiercely debated
- Pop: 420 million
- GDP: $12 trillion
- Members: 3
- Free-Trade Area
- Began: 1994
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NAFTA Effects
Three-nation trade flows
Jobs and wages
“Fast track” authority
Future expansion?
Single currency?
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Andean Community
• Internal tariff reduction
• Common external tariff
• Common transport policies
• Impaired by ideological conflict
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Pop: 105 million
GDP: $500 billion
Members: 5
Customs Union
Began: 1969
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Southern Common Market
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MERCOSUR
Very successful early
Future “SAFTA”?
Impaired by ideology and economic
hardships
- Pop: 220 million
- GDP: $2 trillion
- Members: 4 (+2)
- Customs Union
- Began: 1988
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Central America / Caribbean
Central American Common Market (CACM)
- Peace is driving tentative optimism
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Pop: 33 million
GDP: $120 billion
Members: 5
+/- Common Market
Began: 1961
Caribbean Community and Common Market
(CARICOM)
- Members have little to offer each other
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Pop: 33 million
GDP: $120 billion
Members: 5
+/- Common Market
Began: 1961
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Free Trade Area of the Americas
Would create the largest free-trade area on the
planet
From northern tip of Alaska to southern tip of Tierra
del Fuego in South America
Could mean enormous cost savings for business
Protests by many groups is slowing progress
- Pop: 800 million
- GDP: $14 trillion
- Members: 34
- Free-Trade Area
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Association of Southeast
Asian Nations
ASEAN
1. Economic, social and cultural development
2. Safeguard economic and political stability
3. Serve as a forum to resolve disputes
Pop: 500 million
GDP: $800 billion
Members: 10
General Cooperation
Began: 1967
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Asia Pacific Economic Cooperation
APEC: Group of 21 nations ringing the
Pacific Ocean that accounts for over
half of world trade
1. Not designed as a free-trade bloc
2. Strengthen multilateral trade system
3. Liberalize trade and investment rules
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Middle East and Africa
Gulf Cooperation Council (GCC)
- Six Arab nations (1980)
- Economic and political aims
- Free travel; property rights
Economic Community of West African States
(ECOWAS)
- Common market hopes (1975)
- Little progress to date
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