1 CHAPTER VIII REGIONAL ECONOMIC INTEGRATION INTERNATIONAL BUSINESS

2 Learning Objectives Define regional economic integration, and identify its five levels. Discuss the benefits and drawbacks associated with regional economic integration. Describe regional integration in Europe, and its pattern of enlargement. Characterize regional integration in Asia, and discuss how it differs from integration elsewhere. Describe regional integration in the Middle East and Africa, and explain why progress there has been slow.

3 WHAT IS REGIONAL ECONOMIC INTEGRATION? Regional Economic Integration (regionalism): Process whereby countries in a geographic region cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital.

4 WHAT IS REGIONAL ECONOMIC INTEGRATION? Levels of Regional Integration Free- Trade Area Customs Union Common Market Economic Union Political Union

5 Levels of Regional Integration Free- Trade Area: Economic integration whereby countries seek to remove all barriers to trade between themselves, but each country determines its own barriers against nonmembers

6 Levels of Regional Integration Customs Union : Economic integration whereby country remove all barriers to trade between themselves but erect a common trade policy against nonmembers

7 Levels of Regional Integration Common Market Economic integration whereby countries remove all barriers to trade and the movement of labor and capital between themselves but erect a common trade policy against nonmembers.

8 Levels of Regional Integration Economic Union Economic integration whereby countries remove barriers to trade and the movement of labor and capital, erect a common trade policy against nonmembers, and coordinate their economic policies.

9 Levels of Regional Integration Political Union Economic and political integration whereby countries coordinate aspects of their economic and political systems.

10 Levels of Regional Integration Free-Trade Area Customs Union Common Market Economic Union Political Union Greater integration

11 EFFECTS OF REGIONAL ECONOMIC INTEGRATION Benefits of Regional Integration Drawbacks of Regional Integration

12 Benefits of Regional Integration Trade Creation Greater Consensus Political Cooperation Employment Opportunities

13 Benefits of Regional Integration Trade Creation Increase in the level of trade between nations that results from regional economic integration.

14 Benefits of Regional Integration Greater Consensus The Benefits of trying to eliminate trade barriers in smaller groups of countries. It can be easier to gain consensus from fewer members as opposed to.

15 Benefits of Regional Integration Political Cooperation Be political benefits from efforts toward regional economic Integration. A group of nations can have significantly greater political weight than each nation has individually.

16 Benefits of Regional Integration Employment Opportunities Expand employment opportunities by enabling people to move from one country to another. Simply to earn a higher wage.

17 Drawbacks of Regional Integration Trade diversion Shifts in Employment Loss of National Sovereignty

18 Drawbacks of Regional Integration Trade diversion Diversion of trade away from nations not belonging to a trading bloc and toward member nations

19 Drawbacks of Regional Integration Shifts in Employment Industries requiring mostly unskilled labor

20 Drawbacks of Regional Integration Loss of National Sovereignty Successive levels of integration require that nations surrender more of their national sovereignty

21 INTEGRATION IN EUROPE European Union European Free Trade Association (EFTA)

22 European Union European monetary union Enlargement of the European Union Structure of the European Union

23 European Union European Monetary Union The European Union that established its own central bank and currency

24 European Union Enlargement of the European Union 15  25 (May 2004) Some certain demands (Copenhagen Criteria):  Has stable institutions (democracy, law, Human Rights, Minorities)  Market Economy  Is able to assume the obligations of membership (economic, monetary, political union)  Adopt the rules and regulations of the community

25 European Union Structure of the European Union European Parliament Council of the European Union European Commission Court of Justice Court of Auditors

26 European Free Trade Association (EFTA)

27 INTEGRATION IN THE AMERICAS North American Free Trade Agreement (NAFTA) Andean Community Latin American Integration Association (ALADI) Southern Common Market (MERCOSUR) Central America and the Caribbean Free Trade Area of the Americas (FTAA) Transatlantic Economic Partnership (TEP)

28 North American Free Trade Agreement (NAFTA) Local Content Requirements and Rules of Origin. Effects of NAFTA Expansion of NAFTA

29 North American Free Trade Agreement (NAFTA)

30 Andean Community Main Objectives: Tariff Reduction for Trade Common Policies

31 Andean Community Latin American Free Trade Association (LAFTA) Includes 5 South American Countries  Bolivia  Colombia  Ecuador  Peru  Venezuela

32 Latin American Integration Association (ALADI) Its main objective is the establishment of a common market, in pursuit of the economic and social development of the region. Its members are: Argentina, Bolivia, Brazil, Cuba, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.

33 Southern Common Market (MERCOSUR) Customs Union Members : Argentina Brazil Paraguay Uruguay Venezuela

34 Southern Common Market (MERCOSUR)

35 Central America and the Caribbean Caribbean Community & Common Market Central American Common Market

36 Caribbean Community & Common Market Members: 15  Antiqua and Barbuda  Bahamas  Barbados  Belize  Dominica  Grenada  Guyana  Haiti  Jamaica  Montserrat  Saint Kitts and Nevis  Saint Lucia  Saint Vincent and Grenadines  Suriname  Trinidad and Tobago

37 Free Trade Area of the Americas (FTAA)  Anti & Barbuda  Argentina  Bahamas  Barbados  Belize  Bolivia  Brazil  Canada  Chile  Colombia  Costa Rica  Dominica  Dominican  Ecuador  El Salvador  Grenada  Guatemala  Guyana  Haiti  Honduras  Jamaica  Mexico  Nicaragua  Panama  Paraguay  Peru  Saint Kitts & Nevis  Saint Lucia  Saint Vincent  Suriname  Trinidad  US  Uruguay  Venezuela

38 Transatlantic Economic Partnership (TEP) The Transatlantic between US and EU

39 INTEGRATION IN ASIA Association of Southeast Asian Nations (ASEAN) Asia Pacific Economic Cooperation (APEC)

40 ASEAN

41 ASEAN

42 ASEAN

43 ASEAN Members 10  Brunei  Myanmar  Cambodia  Indonesia  Laos  Malaysia  Philippines  Singapore  Thailand  Vietnam

44 INTEGRATION IN THE MIDDLE EAST AND AFRICA Gulf Cooperation Council (GCC) Economic Community of West African States (ECOWAS)

45 Gulf Cooperation Council (GCC) Members: Bahrain Kuwait Oman Qatar Saudi Arabia The United Arab Emirate

46 Economic Community of West African States (ECOWAS) Formation of a customs union and eventual common market and monetary union. Ecowas nations comprise a large portion of the economic activity in sub-Saharan Africa.

47 THE END