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

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

3. 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.

4. © The McGraw Hill Companies, Inc., 2000 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.

5. © The McGraw Hill Companies, Inc., 2000 Political World Map

6. © The McGraw Hill Companies, Inc., 2000 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.

7. © The McGraw Hill Companies, Inc., 2000 The European Union [EU]

8. © The McGraw Hill Companies, Inc., 2000 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

9. © The McGraw Hill Companies, Inc., 2000 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

10. © The McGraw Hill Companies, Inc., 2000 EU Governance Heads of State and Commission President 1 representative from each member 27 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 785 directly elected members Propose amendments to legislation, veto power over budget and single- market legislation, appoint commissioners. 1 judge from each country Court of Justice Hears appeals of EU Laws.

11. © The McGraw Hill Companies, Inc., 2000 Map

12. © 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

13. © The McGraw Hill Companies, Inc., 2000 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

14. © The McGraw Hill Companies, Inc., 2000 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

15. © The McGraw Hill Companies, Inc., 2000 Other Hemisphere Associations  Central American Common Market  CARICOM  Free Trade Area of the Americas

16. © The McGraw Hill Companies, Inc., 2000 ASEAN

17. © The McGraw Hill Companies, Inc., 2000 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.

18. © The McGraw Hill Companies, Inc., 2000 Map

19. © The McGraw Hill Companies, Inc., 2000 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