Ch.6: International Environment: Regional Political & Economic Integration

1. Ch.6: International Environment:Regional Political & Economic Integration

2. Levels of Economic Integration Level ofIntegration Political Union Economic Union NAFTA Common Market Customs Union Free Trade Area EU 1992

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.

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.

5. Political World Map

6. 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.

7. The European Union [EU]

8. Austria* Belgium* Denmark Finland* France* Germany* Greece* Ireland* Italy* Luxembourg* The Netherlands* Portugal* Spain* Sweden The United Kingdom Cyprus* Czech Republic Estonia* Hungary Latvia Lithuania Malta* Poland Slovakia* Slovenia* Bulgaria Romania * Countries that have adopted the Euro as the common currency of the EU Members of the European Union

9. European Union and the US • Population (2007) • USA : 302 million • EU: 492 million • Portion of World Trade (2005 – WTO figures) • Merchandise: • USA: 21.4% of Imports; 11.7% of Exports • EU: 18% of Imports; 17.1% of Exports • Commercial Services • USA: 12% of Imports; 14.8% of Exports • EU: 24.4% of Imports; 27.1% of Exports

10. EU Governance European Council European Commission 27 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 785 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.

11. Map

12. 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

13. 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

14. 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

15. Other Hemisphere Associations • Central American Common Market • CARICOM • Free Trade Area of the Americas

16. ASEAN

17. 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.

18. Map

19. 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