Geographic Supranational Trends & Economics of Trade Keith L. White

Supranationalism The efforts of three or more states to forge associations for common advantage and in pursuit of common goals International sanctions From League of Nations to United Nations

The United Nations Representation of countries

Why Trade? Increase productivity Improve standard of living Utilize resources ABSOLUTE VS. COMPARATIVE ADVANTAGE

Absolute Advantage A country can produce more of a given product (good or service) than another country using the same resources.

Comparative Advantage The production of a good or service can be produced at a relatively lower OPPORTUNITY COST. (David Ricardo) = everyone will be better off producing the products they produce relatively best. Basis for today’s international trade

Economic Free Trade Eliminate trade barriers (tariffs/trade quotas/restrictions) Border restrictions/check points “Open skies” (airline routes) Cost/benefits analysis EU NAFTA Currency/Monetary consolidation? (Euro) A Global Order?

Toward a European Union The Organization of the European Economic Community (OEEC) France proposed a union with six other states called the European Coal and Steel Community (ECSC) The ECSC through negotiations and agreement led to the formation of the Common Market (EEC) Expansion created the European Community (EC) In 1992, further expansion led to creation of the European Union (EU)

Regional Multinational Unions Supranationalism elsewhere –NAFTA—the North American Free Trade Agreement –CARICOM –South America’s MERCOSUR –ECOWAS –Today, new groups are forming in almost all parts of the world FTAA—Free Trade Area of the Americas Other forms of Supranationalism –NATO –Cultural unions –Political unions

THE CHANGING GLOBAL POLITICAL LANDSCAPE

Restricting International Trade Protective Tariffs Trade Import Quotas Limits (Cargo/Passengers/Flights/Ships) Inspections/Licenses/Fees/Permits Economic Boycotts and Trade Embargos

Protectionist Arguments in USA National Defense Infant Industry Protection/Competition Domestic Jobs (Labor Union Influences) Keep US$ at home! Reduce trade deficit (Balance of payments) Environmental Issues

Current Trade Issues of Globalization Labor abuse/work exploitation (children) / Human Rights Safety concerns Environmental/pollution issues Cultural diffusion Devolution Religious fundamentalism vs. the evils of capitalism and free market forces

A New World Order? Write down your thoughts regarding globalization: Describe briefly how you would benefit and how you might not benefit is the world went to ONE currency. (Have fun and name this new currency!) Use an economic cost/benefits analysis for a free trade world. (Hint: Who would benefit and who would have to pay the cost = would the benefit be more than the cost?)

Extra Effort/Commentary The World Is Flat: A Brief History of the Twenty-First Century Thomas L. Friedman