1. International Business Lecture No,39 By Dr.Shahzad Ansar

2. Case for Regional Integration
Economic
Allow countries to specialize in products they produce efficiently.
Easier to gain agreement than GATT/WTO.

3. Case for Regional Integration
Role of FDI is enhanced.
Exploit gains from free flow of goods and services and investment
Political
Creates incentive for political cooperation.
Reduces potential for violent confrontation.
Enhanced clout to deal with ‘superpowers’.

4. Impediments to Integration
Although a nation may benefit, groups within a nation may be hurt.
Concerns about national sovereignty.
Debate:
Trade creation.
Trade diversion.
Global Integration

5. U.S. Mexican Trade in Textiles, 1993-2000
Figure 8.3

6. Europe 1994)

7. EU Evolution Product of two political factors:
Devastation of WWI and WWII and desire for peace.
Desire for European nations to hold their own, politically and economically, on the world stage

8. EU Evolution 1951 - European Coal and Steel Community.
1957- Treaty of Rome establishes the European Community.
Treaty of Maastricht changes name to the European Union.

9. Hears appeals of EU Laws.
EU Governance
1 judge from
each country
Heads of State
and
Commission
President
630 directly
elected members 1
representative
from each
member
20 Commissioners
appointed by
members for
4 year terms
European Council
Resolves policy
issues sets
policy direction.
European Commission
Proposing,
implementing,
monitoring
legislation.
Council of Ministers
Ultimate controlling authority. No EU laws w/o approval.
European Parliament
Propose amendments to legislation, veto power over budget and single-market legislation, appoint commissioners.
Court of Justice
Hears appeals of EU Laws.

10. The Single European Act
1987- EC agrees to work toward establishing a single market by December 31, 1992.
The Act can lead to gains in trade and investment and increased competition when barriers are removed.

11. The Single European Act
Stimulus:
Disharmony among the EC member countries:
Trade policy.
Technical standards
Objectives:
Remove frontier controls.
“Mutual recognition” of product standards.
Open public procurement to nonnationals.

12. The Single European Act
Led to establishing the Delors Commission in 1985.
Basis for Single European Act.
Lift barriers to banking and insurance competition.
Remove restrictions on foreign exchange transactions.
Abolish cabotage restrictions.