1. Chapter 10 1. The reasons for economic union
2. Patterns of international cooperation
3. The evolution of the European Community to the European Union
4. Strategic implications for marketing in Europe

2. Chapter Learning Objectives
5. Evolving patterns of trade as Eastern Europe and the former Soviet states embrace the free-market system
6. The trade linkage of NAFTA and South America and its regional effects
7. The development of trade within the Asia-Pacific Rim

3. Traits of Successful Economic Unions
Economic Compatibility (similar economic systems)
Political Compatibility (similar political systems)
Cultural Compatibility
Geographic factors
Weakness in some must be balanced by strengths in others

4. Patterns of Multinational Cooperation
There are five fundamental groupings for regional economic integration as follows:
Regional Cooperation Groups
Free Trade Areas
Customs Unions
Common Markets and Economic Unions
Political Unions

5. Regional Cooperation Groups
A group of countries that have agreed to participate in basic industries beneficial to each or jointly develop joint ventures that benefit both countries,
e.g., Colombia and Venezuela built a hydroelectric dam on the Orinico river

6. Free Trade Areas
A group of countries that have agreed to reduce drastically (but not eliminate) all trade barriers such as customs duties and non-tariff barriers (standards)
Examples of Free Trade Areas: NAFTA, and European Free Trade Area (EFTA) between Iceland, Liechtenstein, Norway, and Switzerland

7. Customs Unions
In addition to drastically reducing trade barriers from FTA identified previously, a group of countries that have agreed to eliminate customs duties levied among member countries
Examples of Customs Unions: East African Customs Union between Ethiopia, Kenya, Sudan, Tanzania, Uganda, and Zambia

8. Common Markets
In addition to drastically reducing trade barriers, and eliminating customs duties levied from FTA and Customs Unions identified previously, a common market is a group of countries that allow:
the free flow of capital and labor (engineers, doctors, and lawyers can work without recertification) among members
a common currency
a common central bank; and
common policies on transportation, agriculture, social services, welfare, and taxes
Latin America boasts three common markets: the Central American Common Market (CACM), the Andean Common Market, and the Southern Cone Common Market (MERCOSUR).

9. Political Unions
The highest level of cooperation among member countries
Examples of Political Unions: COMECON (Council for Mutual Economic Assistance), and U.S.S.R., but it no longer exists

17. North American Free-Trade Area (NAFTA)
Non-NAFTA imports undergo sufficient manufacture or processing to become products that can qualify under a different tariff classification.
Canada
United States
Mexico

18. Central European Free-Trade Area (CEFTA)
Poland
Hungary
Slovakia
Czech Republic
Slovenia
Romania

19. Latin American Integration Association (LAIA)
Argentina
Mexico
Bolivia
Paraguay
Brazil
Peru
Chile
Uruguay
Columbia
Venezuela
Ecuador

20. Association of Southeast Asian Nations (ASEAN) + 3
Brunei
Singapore
Indonesia
Thailand
Laos
Vietnam
Malaysia
Japan
Myanmar
S. Korea
Philippines
China

21. Asia-Pacific Economic Cooperation (APEC)
Australia
Japan
Philippines
Brunei
South Korea
Russia
Canada
Malaysia
Singapore
Chile
Mexico
Taiwan
China
New Zealand
Thailand
Hong Kong
Papua New Guinea
U.S.A.
Indonesia
Peru
Vietnam

22. Economic Community of West African States (ECOWAS)
Benin
Guinea-Bissau
Burkina Faso
Liberia
Cote d’ Ivoire
Mali
Gambia
Mauritania
Ghana
Niger
Guinea
Nigeria