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

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

6. 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 European Union [EU]

8. 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. 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. 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.

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

12. 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. ANCOM: Andean Pact Bolivia, Colombia, Ecuador, Peru, Venezuela
Cartagana Agreement, 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 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. Other Hemisphere Associations
Central American Common Market
CARICOM
Free Trade Area of the Americas

16. ASEAN

17. 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. Map

19. 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