8-1 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Cross-National Cooperation and Agreements

8-2 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall GATT The General Agreement on Tariffs and Trade (GATT), begun in 1947, created a continuing means for countries to negotiate the reduction and elimination of trade barriers and to agree on simplified mechanisms for the conduct of international trade

8-3 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall WTO The World Trade Organization (WTO) replaced GATT in 1995 as a continuing means of trade negotiations that aspires to foster the principle of trade without discrimination and to provide a better means of mediating trade disputes and of enforcing agreements

8-4 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Regional Economic Integration Efforts at regional economic integration began to emerge after World War II as countries saw benefits of cooperation and larger market sizes

8-5 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The Effects of Integration Once protection is eliminated among member countries, trade creation allows MNEs to specialize and trade based on comparative advantage

8-6 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall European Union Regional, as opposed to global, economic integration occurs because of the greater ease of promoting cooperation on a smaller scale The European Union (EU) is an effective common market that has abolished most restrictions on factor mobility and is harmonizing national political, economic, and social policies The EU is comprised of 27 countries, including 12 countries from mostly Central and Eastern Europe that joined since 2004 – created a common currency, the euro

8-7 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The North American Free Trade Agreement (NAFTA) The North American Free Trade Agreement (NAFTA) is designed to eliminate tariff barriers and liberalize investment opportunities and trade in services Key provisions in NAFTA are labor and environmental agreements

8-8 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Regional economic integration in the Americas Caribbean Community (CARICOM) Central American Common Market (CACM) Central American Free Trade Agreement (CAFTA-DR) Andean Community (CAN) The Southern Common Market (MERCOSUR) The proposed South American Community of Nations.

8-9 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Regional economic integration in Asia & Africa Association of Southeast Asian Nations (ASEAN) Asia Pacific Economic Cooperation (APEC) The African Union