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Multinational Market Regions and Market Groups. Chapter. 10. Successful Economic Union Requirements.  Economic Compatibility  Political Compatibility  Geographic Proximity  Cultural Compatibility Weakness in some must be balanced by strengths in others. 10-2. Irwin/McGraw-Hill.

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Multinational Market

Regions and Market Groups

Chapter

10


Successful economic union requirements
Successful Economic Union Requirements

 Economic Compatibility

 Political Compatibility

 Geographic Proximity

 Cultural Compatibility

Weakness in some must be balanced by strengths in others

10-2

Irwin/McGraw-Hill


Patterns of Multinational Cooperation

 Regional Cooperation Groups

 Free Trade Area

 Customs Union

 Common Market

 Political Union

10-3

Irwin/McGraw-Hill


European trade areas 1997
European Trade Areas - 1997*

European Community (EC) European Free Trade Area (EFTA)

Belgium Italy Iceland Norway

Denmark Luxembourg Liechtenstein Switzerland

France The Netherlands

Germany Portugal

Greece Spain

Ireland United Kingdom

EC Countries and EU Countries and

Austria Norway Iceland

Finland Sweden

In Membership NegotiationsSecond Tier-Awaiting Evaluation

Cypress Hungary Bulgaria Romania

Czech Republic Poland Latvia Slovakia

Estonia Slovenia Lithuania Malta

10-4

European Unity (EU) European Economic Area (EEA)

* Visit http://europa.eu.int/ (select Abc and then Agenda 2000 for details on

requirements of accession).

Irwin/McGraw-Hill


The european economic area eu efta and associates
The European Economic Area: EU, EFTA, and Associates

ICELAND

EU

EFTA

SWEDEN

NORWAY

EC Associated

FINLAND

ATLANTIC OCEAN

10-5

Netherlands

DENMARK

UNITED

KINGDOM

IRELAND

GERMANY

BELGIUM

Austria

FRANCE

Switz.

ITALY

Portugal

SPAIN

TURKEY

MALTA

GREECE

Irwin/McGraw-Hill


EC Institutions

European Commission

10-6

Council of Ministries

European Parliament

European Court of Justice

Irwin/McGraw-Hill


A comparison of the eu and nafta
A Comparison of the EU and NAFTA

Population GNP Imports** Exports**

($ millions)* (per capita)* ($ millions) ($ millions)

10-7

EU* 373.5 $ 8,180 1,899,466 1,927,914

NAFTA 387.4 8,061 1,014,211 852,536

* Includes 15 Countries.

**Includes intra-member trade.

SOURCES: “Indicators of Market Size for 115 Countries,” Crossborder Monitor, August

27, 1997; and International Marketing Data and Statistics, 1997 (London: Euromonitor,

1997).

Irwin/McGraw-Hill


Treaty of Amsterdam - Objectives

 To place employment and citizens’ rights at the heart of the Union.

 To sweep away the last remaining obstacles to freedom of movement and to strengthen security.

 To give Europe a stronger voice in world affairs.

 To make the Union’s institutional structure more efficient with a view to enlarging the Union.

10-8

For the most current information, visit www.europa.eu.int.

Irwin/McGraw-Hill


Level of Involvement with the EC

1. Firms based in Europe with well-established manufacturing and distribution operations in several European countries.

2. Firms with operations in a single EC country.

3. Firms that export manufactured goods to the EC from an offshore location.

4. Firms that have not actively exported to EC countries.

10-9

Irwin/McGraw-Hill


Commonwealth of independent states

Twelve republics, each with their own legislatures

Twenty smaller “autonomous republic” or homelands for various ethnic groups

Commonwealth of Independent States

ARCTIC OCEAN

BELARUS

MOLDOVA

10-10

UKRAINE

RUSSIAN REPUBLIC

GEORGIA

ARMENIA

AZERBAIJAN

KAZAKHSTAN

UZBEKISTAN

TURKMENISTAN

KYRGYZSTAN

TAJIKISTAN

Irwin/McGraw-Hill


Central European Free-Trade Area (CEFTA)

Poland Hungary

Slovakia Czech Republic

Slovenia Romania

10-11

Irwin/McGraw-Hill


North American Free-Trade Area (NAFTA)

Canada

10-12

United States

Mexico

Irwin/McGraw-Hill


North American Free-Trade Area Provisions

 Market Access Non Tariff Barriers

 Rules of Origin Customs Administration

 Investment Services

 Intellectual Property Standards

 Government Procurement

10-13

Irwin/McGraw-Hill


NAFTA Rules of Origin

Rule Type Description

Tariff shift rule Non-NAFTA imports undergo sufficient manufacture or processing to become products that can qualify under a different tariff classification.

Value-content rule A set percentage of the value of the good must be North American (usually coupled with a tariff classification shift requirement). Some goods are subject to the value-content rule only when they fail to pass the tariff classification test because of non-NAFTA inputs.

10-14

* A complete description of the rules of origin can be found at www.mac.doc.gov/nafta/menu1.htm (select NAFTA Rules of Origin and Customs Information).

Irwin/McGraw-Hill


Southern Cone Free Trade Area (Mercosur)

ArgentinaBolivia

Brazil Chile

Paraguay Uruguay

10-15

Irwin/McGraw-Hill


Latin American Integration Association (LAIA)

 Argentina Mexico

 Bolivia Paraguay

 Brazil Peru

 Chile Uruguay

 Columbia Venezuela

 Ecuador

10-16

Irwin/McGraw-Hill


Andean Common Market (ANCOM)

Bolivia

Columbia

10-17

Ecuador

Peru

Venezuela

Panama (Assoc.)

Irwin/McGraw-Hill


Caribbean Community and Common Market (CARICOM)

AntiguaMontserrat

BarbudaSt. Kitts-Nevis

BelizeAnguilla

Dominica St. Lucia

GrenadaSt. Vincent

GuyanaTrinidad-Tobago

Jamaica

10-18

Irwin/McGraw-Hill


Central America Common Market (CACM)

Guatemala

10-19

Costa Rica

Nicaragua

Honduras

Irwin/McGraw-Hill


The Future

• NAFTA

• SAFTA ???

• FTAA ???

10-20

Irwin/McGraw-Hill


Association of Southeast Asian Nations (ASEAN)

Brunei Philippines

Indonesia Singapore

LaosThailand

Malaysia Vietnam

Myanmar

10-21

Irwin/McGraw-Hill


ASEAN + 3

• Brunei • Singapore

• Indonesia • Thailand

• Laos• Vietnam

• Malaysia China

• MyanmarJapan

• Philippines South Korea

10-22

Irwin/McGraw-Hill


Comparison of exports among members of apec and the ec
Comparison of Exports Among Members of APEC and the EC

Population, 1989 Exports, 1990 Exports, 1995 GNP, 1996

(millions) (U.S. $ millions) (U.S. $ millions) (U.S. $ billions)

APEC 2,235 732,869 770,097 22,952Americas* 406 306,486 311,085 7,989Asia 1812 399,455 419,901 6,447Oceania 22 26,928 34,111 343

EC 374 515,915 628,606 8,180

10-23

*includes: U.S., Canada, Mexico, and Chile.

SOURCES: IMF: International Financial Statistics, Direction of Trade; OECD:

National Account, EC Committee: “Indicators of Market Size for 115 Countries,”

Crossborder Monitor, August 27, 1997; and International Marketing Data and Statistics.

1997 (London: Euromonitor, 1997).

Irwin/McGraw-Hill


Economic Community of West African States (ECOWAS)

 Benin Liberia

 Burkina Faso Mali

 Cote d’ Ivoire Mauritania

 Gambia Niger

 Ghana Nigeria

 Guinea

 Guinea-Bissau

10-24

Irwin/McGraw-Hill


Southern African Development Community (SADC)

 Angola South Africa

 Botswana Swaziland

 Lesotho Tanzania

 Namibia Zambia

 Malawi Zimbabwe

 Mauritius

 Mozambique

10-25

Irwin/McGraw-Hill


Afro-Malagasy Economic Union

▶ Benin ▶ Gabon

▶ Burkina Faso ▶ Mali

▶ Cameroon ▶ Mauritania

▶ Central African Republic ▶ Niger

▶ Chad ▶ Senegal

▶ People’s Repub. of the Congo ▶ Togo

▶ Cote d’Ivoire

10-26

Irwin/McGraw-Hill


East African Customs Union

▶ Ethiopia ▶ Tanzania

▶ Kenya ▶ Uganda

▶ Sudan ▶ Zambia

10-27

Irwin/McGraw-Hill


Maghreb Economic Community

▶ Algeria ▶ Tunisia

▶ Libya ▶ Morocco

10-28

Irwin/McGraw-Hill


Economic Community of West African States (ECOWAS)

▶ Benin ▶ Guinea-Bissau

▶ Burkina Faso ▶ Liberia

▶ Cote d’Ivoire ▶ Mali

▶ Gambia ▶ Mauritania

▶ Ghana ▶ Niger

▶ Guinea ▶ Nigeria

10-29

Irwin/McGraw-Hill


West Africa Economic Community

● West Africa Economic Community

▶ Senegal ▶ Mali

▶ Togo ▶ Mauritania

▶ Burkina Faso ▶ Niger

▶ Cote d’Ivoire

● Customs and Economic Union of Central Africa (CEUCA)

▶ Cameroon ▶ P. Rep. Of Congo

▶ C. Africa Repub. ▶ Gabon

10-30

Irwin/McGraw-Hill


Customs and Economic Union of Central Africa (CEUCA)

▶ Cameroon ▶ P. Rep. Of Congo

▶ C. Africa Repub. ▶ Gabon

10-31

Irwin/McGraw-Hill


Arab Common Market

Iraq

Kuwait

10-32

Jordan

Syria

Egypt

Irwin/McGraw-Hill


Economic Cooperation Organization (ECO)

Pakistan

Iran

10-33

Turkey

Azerbaijan

Turkmenistan

Uzbekistan

Irwin/McGraw-Hill


Future multinational trade groups
Future Multinational Trade Groups

 United States/Japan

 Hong Kong/Taiwan/China

 Asia-Pacific Rim Countries

 Hong Kong/Taiwan/Coastal Provinces of Southern China

 Western Hemisphere Free Trade Area

 Transatlantic Free Trade Area (United States and European Union)

10-34

Irwin/McGraw-Hill


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