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

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

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.

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.

Political World Map

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.

The European Union [EU]

Members of the European Union 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

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

785 directly elected members 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 Court of Justice European Parliament Ultimate controlling authority. No EU laws w/o approval. 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.

Map © The McGraw Hill Companies, Inc., 2000

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

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

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

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

ASEAN

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.

Map

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