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Types of Multinational Trade Groups Regional Cooperation Groupnations jointly participate in developing industries and infrastructure beneficial to each.

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Presentation on theme: "Types of Multinational Trade Groups Regional Cooperation Groupnations jointly participate in developing industries and infrastructure beneficial to each."— Presentation transcript:

1 Types of Multinational Trade Groups Regional Cooperation Groupnations jointly participate in developing industries and infrastructure beneficial to each country Free Trade Areaparticipants reduce or eliminate tariffs and trade barriers between members; each member maintains its own tariff schedule against non-members Customs Unionparticipants reduce or eliminate tariffs and barriers for members and maintain a uniform tariff schedule imposed on non-members

2 Types of Multinational Trade Groups (continued) Common Marketmembers reduce or eliminate internal tariffs and maintain a uniform external tariff schedule; all restrictions on the free flow of capital and labor are removed between members Political Unioninternal tariffs are eliminated; uniform external tariffs are set; labor, capital, and goods flow freely between members; members agree to central governing agencies with jurisdiction over all members

3 What are the consequences to a country if it is not a member of a multinational trade bloc? Exports are significantly reduced Tariffs on goods shipped into other countries are considerably higher Non-tariff trade barriers are much more plentiful It is much harder for domestic firms to be price competitive and participate in trade There is less variety and higher prices in the domestic market Political and economic alienation occurs

4 Toward the European Union 1957Treaty of Romegave a blueprint and outline for the establishment of a European common market; ratified in Single Europe Actcalled for elimination of internal border controls, uniform product standards, mutual recognition of products, single customs document 1992Maastricht Treatyallowed full implementation of Single Europe Act and called for the establishment of a single monetary unit 1999Euro available to banks and financial institutions, virtual trading begins 2002Euro notes and coins begin public circulation

5 European Union Members 15 Original MembersAustria, Belgium, Denmark (not in monetary union), Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Spain, Sweden (not in monetary union), Portugal, United Kingdom (not in monetary union) 10 New Members (associate privileges began ) Estonia, Latvia, Lithuania, Poland, Hungary, Czech Republic, Slovakia, Slovenia, Malta, Cyprus Rejected: Turkey Candidates for 2007: Bulgaria, Romania

6 EU Governing Bodies European Commissioninitiates policy, proposes and supervises how laws will be executed Council of Ministersvoting body; debates and decides which proposals to enact into law European Parliamentamends legislation; has extensive budgetary powers European Court of Justicean appellate court that interprets and rules on laws under dispute

7 Commonwealth of Independent States (CIS)The other European Trade Bloc Made up of former Soviet (USSR) republics MembersRussia, Ukraine, Belarus, Armenia, Moldavia, Azerbaijan, Uzbekistan, Turkmenistan, Tajikistan, Kazakhstan, Kyrgyzstan, Georgia Goalsopen borders, establish free trade, establish no central government, repeal all Soviet laws, allow new currencies, jointly control nuclear weapons, fulfill all Soviet treaties and debt obligations

8 NAFTA Key Provisions Eliminates all tariffs on industrial goods Eliminates multiple customs procedures Establishes first comprehensive set of principles governing services Establishes highest standards for protecting intellectual property Prohibits the use of standards or regulations as obstacles to trade Enforces tough rules of origin (to qualify as duty free, goods must contain 62.5 percent North American content)

9 Other Trade Blocs in The Americas Mercosur (largest in South America)Brazil, Argentina, Paraguay, Uruguay, Bolivia, Chile Andean Common MarketColumbia, Ecuador, Peru, Venezuela, Panama Central American Common MarketGuatemala, Honduras, Costa Rica, Nicaragua Caribbean Common Market13 members Latin American Integration Association (LAIA) Long-term goal: Latin American common market

10 Future of Trade BlocsAsia?? ASEAN (Association of Southeast Asian Nations)considered a BEM by the U.S. Department of Commerce MembersBrunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Myanmar, Laos Evolving to ASEAN + 3 (China, Japan, South Korea)

11 Future of Trade BlocsThe Americas, Africa, Middle East?? NAFTA, SAFTA, of FTAA?? Africa has many trade blocs but most are ineffective Middle East has been least aggressive at forming regional trade blocs of any world region

12 Future of Trade Blocs?? Will members strongly support each other and work to exclude non-members? Will members trade only with other members for certain goods? Will blocs begin to negotiate trade deals with each otheri.e. bloc-to-bloc rather than country-to- country?


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