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Regional Economic Integration Chapter 8

Regional Economic Integration Chapter 8. Levels of Economic Integration. Level of Integration. Political Union. Economic Union. NAFTA. Common Market. Customs Union. Free Trade Area. Figure 8.1 in text. EU 1992. 8-1. Economic Case for Regional Integration.

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Regional Economic Integration Chapter 8

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  1. Regional Economic IntegrationChapter 8

  2. Levels of Economic Integration Level ofIntegration Political Union Economic Union NAFTA Common Market Customs Union Free Trade Area Figure 8.1 in text EU 1992 8-1

  3. 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. 8-2

  4. 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. 8-3

  5. Impediments to Regional Integration • Groups within countries may be hurt. • Potential loss of sovereignty and control over domestic issues. • Debate: • Integration is trade creation? • Integration is trade diversion? 8-4

  6. Political World Map 8-5

  7. 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. 8-6

  8. Growth of Regional Arrangements 8-7

  9. 8-8

  10. Map 8.1 8-9

  11. European Union GDP 8-10

  12. European Union and the US(April, 1998) 8-11

  13. US Top European Trading Partners $ Billions 8-12

  14. EU and US Annual Real GDP Growth Rates % 8-13

  15. EU and US Unemployment % 8-14

  16. EU and US Inflation % 8-15

  17. EU Governance European Council European Commission 20 Commissioners appointed by members for 4 year terms Heads of State and Commission President Proposing, implementing, monitoring legislation. Resolves policy issues Sets policy direction. Council of Ministers 1 representative from each member Ultimate controlling authority. No EU laws w/o approval. European Parliament Court of Justice 630 directly elected members Propose amendments to legislation, veto power over budget and single-market legislation, appoint commissioners. 1 judge from each country Hears appeals of EU Laws. 8-16

  18. Map 8.2 8-17

  19. 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 8-18

  20. NAFTA and Mexico Maquiladora Millions of Workers 8-19

  21. Employment in Foreign-Operated Factories in Mexico 8-20

  22. Canadian Workers Move South Thanks to NAFTA Thousands 8-21

  23. Andean PACT Map 8.2 8-22

  24. 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 8-23

  25. US Trade With The Andean Community $ Billions 8-24

  26. Mercosur Map 8.2 8-25

  27. 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 8-26

  28. US Trade With Mercosur $ Billions 8-27

  29. Other Hemisphere Associations • Central American Common Market • CARICOM • Free Trade Area of the Americas 8-28

  30. ASEAN 8-29

  31. 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. 8-30

  32. Association of Southeast Asian Nations 8-31

  33. Net Flows of Private Capital to Indonesia, Malaysia, Philippines, South Korea and Thailand Thru April 30. 8-32

  34. Asian Trade Flows Destination of Exports Source of Imports % 8-33

  35. Map 8.3 8-34

  36. 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 8-35

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