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c hapter 10

c hapter 10. international cooperation among nations. Chapter Objectives. Explain the importance of the GATT and the WTO to international business Contrast the different forms of economic integration among cooperating countries

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c hapter 10

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  1. chapter 10 international cooperationamong nations

  2. Chapter Objectives • Explain the importance of the GATT and the WTO to international business • Contrast the different forms of economic integration among cooperating countries • Analyze the opportunities for international businesses created by completion of the EU’s internal market • Describe the other major trading blocs in today’s world economy 10-2

  3. General Agreement on Tariffs and Trade • Developed as part of the Havana, Cuba, conference in 1947 • Provided forum for trade ministers to discuss barriers to international trade 10-3

  4. The Role of the GATT The GATT’s goal was to promote a free and competitive international trading environment benefiting efficient producers by sponsoring multilateral negotiations to reduce tariffs, quotas, and other nontariff barriers 10-4

  5. Table 10.1 GATT Negotiating Rounds 10-5

  6. Most Favored Nation (MFN) Principle The most favored nation principle requires that any preferential treatment granted to one country must be extended to all countries. 10-6

  7. Exceptions to the MFN Principle • Members permitted to lower tariffs to developing countries without lowering them for more developed countries • Regional arrangements promote economic integration (e.g., EU and NAFTA) 10-7

  8. Goals of the World Trade Organization (WTO) • Promote trade flows by encouraging nations to adopt nondiscriminatory, predictable trade policies • Reduce remaining trade barriers through multilateral negotiations • Establish impartial procedures for resolving trade disputes among members 10-8

  9. Differences between WTO and GATT • GATT focused on promoting trade in goods; WTO’s mandate includes • trade in goods • trade in services • international intellectual property protection • trade-related investment • WTO’s enforcement powers are stronger 10-9

  10. Figure 10.1 The WTO’s Principles of the Trading System 10-10

  11. WTO Challenges • The Cairns Group • Multifibre Agreement • General Agreement on Trade in Services (GATS) • Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) • Trade-Related Investment Measures Agreement (TRIMS) 10-11

  12. Enforcement of WTO Decisions • Country failing to live up to the agreement may have a complaint filed against it • WTO panel evaluates complaint • If found in violation, the country may be asked to eliminate the trade barrier 10-12

  13. Rice producers would likely benefit if trade barriers were eliminated in this market. The world market for rice is distorted by high tariffs, ranging from 20-43 percent. 10-13

  14. Forms of Economic Integration Free Trade Area Customs Union Common Market Economic Union Political Union 10-14

  15. Figure 10.2 Forms of Economic Integration 10-15

  16. European Union (EU) • Most important regional trading bloc • 25 member countries • 455.3 million population • Combined GDP of $12.7 trillion 10-16

  17. Map 10.1 The European Union 10-17

  18. Governing Organizations of the EU • The Council of the European Union • The European Commission • The European Parliament • The European Court of Justice 10-18

  19. The first meeting of the European Commission after the enlargement of the EU to 25 members. 10-19

  20. Figure 10.3 The Co-Decision Procedure 10-20

  21. Three Pillars of the Maastricht Treaty • A new agreement to create common foreign and defense policies among members • A new agreement to cooperate on police, judicial, and public safety matters • The old familiar European Community, with new provisions to create an economic and monetary union among member states 10-21

  22. Components of the Treaty for Europe (Treaty of Amsterdam) • A strong commitment to attack the EU’s chronic high levels of unemployment • A plan to strengthen the role of the European Parliament by expanding the number of areas that require use of the co-decision procedure • Establishment of a two-track system 10-22

  23. Treaty of Nice • Sought to reduce the risk of political gridlock as the number of members increase • reduced number of areas where unanimity is required for Council approval • adjusted number of votes assigned to each Council member 10-23

  24. AFTA ANCOM APEC CACM CARICOM CEMAC CER ECOWAS EU EFTA GCC MERCOSUR NAFTA SADC Major Regional Trade Associations 10-24

  25. Map 10.2 Free Trade Agreements in Central and South America and the Caribbean 10-25

  26. Map 10.3 The ASEAN Members 10-26

  27. Map 10.4 Asia-Pacific Economic Cooperation Initiative (APEC) 10-27

  28. Map 10.5 Free Trade Agreements in Africa 10-28

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