1. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Business 2e C ha p t e r 8 Capitalizing on Global and Regional Integration

2. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. LEARNING OBJECTIVES After studying this chapter, you should be able to: 1.make the case for global economic integration. 2.Explain the evolution of the GATT and the WTO, including current challenges. 3.Make the case for regional economic integration. 4.List the accomplishments, benefits, and costs of the EU. 5.Identify the five organizations that facilitate regional trade in the Americas and describe their benefits and costs. 6.Identify the three organizations that promote regional trade in Asia Pacific and describe their benefits and costs. 7.Understand why regional trade deals are not effective in Africa. 8.Participate in two leading debates on global and regional economic integration. 9.Draw implications for action.

3. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GLOBAL ECONOMIC INTEGRATION Global economic integration Efforts to reduce trade and investment barriers around the globe

4. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. KEY TERMS ON ECONOMIC INTEGRATION Regional economic integration Efforts to reduce trade and investment barriers within one region General Agreement on Tariffs and Trade (GATT) Multilateral agreement governing the international trade of goods (merchandise) World Trade Organization (WTO) Official title of the multilateral trading system and the organization underpinning this system since 2005

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7. WORLD TRADE ORGANIZATION: 1995-PRESENT General Agreement on Trade in Services (GATS) WTO agreement governing international trade of services Trade-Related Aspects of Intellectual Property Rights (TRIPS) WTO agreement governing intellectual property rights

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9. TRADE DISPUTE SETTLEMENT WTO does not have enforcement capability WTO simply recommends that losing countries change their laws or practices and authorizes the winning countries to use tariff retaliation to compel the offending countries to comply with the WTO rulings

10. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. DOHA DEVELOPMENT AGENDA The Doha Round A round of WTO negotiations to reduce agricultural subsidies, slash tariffs, and strengthen intellectual property protection that started in Doha, Qatar, in 2001 Officially known as “Doha Development Agenda,” it was suspended in 2006 due to disagreements

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12. REGIONAL INTEGRATION Economic union Having all the features of a common market, members also coordinate and harmonize economic policies (in areas such as monetary, fiscal, and taxation) to blend their economies into a single economic entity Monetary union A group of countries that use a common currency Political union Integration of political and economic affairs of a region

13. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. TYPES OF REGIONAL ECONOMIC INTEGRATION Free trade area (FTA) Group of countries that remove trade barriers among themselves Customs union One step beyond an FTA, a customs union imposes common external policies on nonparticipating countries Common market Combining everything a customs union has, a common market additionally permits the free movement of goods and people

14. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. THE EU European Union (EU) Official title of European economic integration since 1993

15. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. THE EU TODAY Schengen Passport-free travel zone within the EU Euro Currency currently used in 16 EU countries Euro zone 16 EU countries that currently use the euro as the official currency

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19. THE EU’S CHALLENGES Determining whether to become a political union Voting power within the EU Growth and expansion Labor and immigration Financial crises and recession ? How do you think EU members could solve some of these issues?

20. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. INTEGRATION IN THE AMERICAS North American Free Trade Agreement (NAFTA) Free trade agreement among Canada, Mexico, and the United States

21. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. INTEGRATION IN SOUTH AMERICA Mercosur Customs union in South America that was launched in 1991 Free Trade Area of the Americas (FTAA) Proposed free trade area for the entire Western Hemisphere

22. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. INTEGRATION IN SOUTH AMERICA US-Dominican Republic-Central America Free Trade Agreement (CAFTA) Free trade agreement between US and five Central American countries and Dominican Republic Union of South American Nations (USAN/UNASUR) Regional integration mechanism integrating two existing customs unions (Andean Community and Mercosur) in South America

23. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ASIA PACIFIC REGIONAL ECONOMIC INTEGRATION Association of Southeast Asian Nations (ASEAN) Organization underpinning regional economic integration in Southeast Asia Asia-Pacific Economic Cooperation (APEC) Official title for regional economic integration involving 21 member economies around the Pacific

24. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. AFRICA REGIONAL ECONOMIC INTEGRATION Regional integration initiatives in Africa are both numerous and ineffective ? What are some of the obstacles to regional economic integration in Africa?

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