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Regional Economic Integration Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 8
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8 - 2 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people, or capital Regional Economic Integration
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8 - 3 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Levels of Regional Integration Coordinate aspects of members’ economic and political systems Political Union Remove barriers to trade, labor, and capital, set a common trade policy against nonmembers, and coordinate members’ economic policies Economic Union Remove barriers to trade, labor, and capital among members, and set a common trade policy against nonmembers Common Market Remove barriers to trade among members, and set a common trade policy against nonmembers Customs Union Remove barriers to trade among members, but each country has own policies for nonmembers Free-Trade Area
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8 - 4 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Benefits of Integration Trade creation Greater consensus Political cooperation Creates jobs Trade creation Greater consensus Political cooperation Creates jobs
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8 - 5 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Drawbacks of Integration Trade diversion Shifting employment Lost sovereignty Trade diversion Shifting employment Lost sovereignty
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8 - 6 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall European Union Pop: 500 million GDP: $15 trillion Members: 27 Economic Union Began: 1951
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8 - 7 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall European Union: Early Years European Coal and Steel Community (1951): Removed trade barriers in coal, iron, and steel European Economic Community (1957): Outlined and took initial steps toward common market European Community (1967): Expanded to other industries including atomic energy Single European Act (1987): Harmonized regulations, strived for lower barriers Maastricht Treaty (1991): Set single currency targets, outlined eventual political union European Union (1994): Final name change and reduced barriers further
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8 - 8 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Business in Central Europe Don’t rush familiarity Build relationships Find a local partner Hire local professionals Establish who’s in charge
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8 - 9 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall European Union Enlargement Stable institutions of human rights, democracy, and law Functioning and capable market economy Assume economic, monetary, and political obligations Adopt rules of the Community, Court of Justice, and Treaties Future EU members must meet the four Copenhagen Criteria
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8 - 10 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Five Key EU Institutions European Commission Council of the European Union European Parliament Court of Auditors Court of Justice
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8 - 11 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall European Free Trade Association Iceland, Liechtenstein, Norway, Switzerland Feared lost sovereignty Feared destructive rivalry Desired free-trade gains Cooperates with EU Pop: 12.5 million GDP: $707 billion Members: 4 Free-Trade Area Began: 1960
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8 - 12 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall North American Free Trade Agreement Pop: 445 million GDP: $16 trillion Members: 3 Free-Trade Area Began: 1994
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8 - 13 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall NAFTA Effects Jobs and wages Three-nation trade flows Futureexpansion? “Fast track” AuthoritySinglecurrency?
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8 - 14 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Central American Free Trade Agreement Established in 2006 to include 7 countries U.S., Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua, & Dominican Rep. Should create regional integration, peace, and stability Combined value of goods traded is around $32 billion
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8 - 15 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall CAFTA-DR Effects? More trade and better-paying jobs Poorer farms and small businesses OR
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8 - 16 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Andean Community Internal tariff reduction Common external tariff Common transport policies Ideological conflict Pop: 97 million GDP: $220 billion Members: 4 Customs Union Began: 1969
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8 - 17 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Southern Common Market Also called MERCOSUR Very successful early Future “SAFTA”? Impaired by ideology and economic hardships Pop: 266 million GDP: $2.8 trillion Members: 5 Customs Union Began: 1988
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8 - 18 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Central America / Caribbean Members offer each other little Peace driving tentative optimism Pop: 33 million GDP: $120 billion Members: 5 +/- Common Market Began: 1961 Pop: 6 million GDP: $30 billion Members: 15 Common Market Began: 1973
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8 - 19 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Free Trade Area of the Americas Would be the largest free- trade area on the planet From northern tip of Alaska to southern tip of Tierra del Fuego in South America Could mean enormous cost savings for business Protests by many groups is slowing progress Pop: 830 million GDP: $ trillions Members: 34 Free-Trade Area
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8 - 20 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Association of Southeast Asian Nations GOALS: Promote economic, social, and cultural development Safeguard economic and political stability Serve as a forum to resolve disputes Pop: 560 million GDP: $1.1 trillion Members: 10 General Cooperation Began: 1967
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8 - 21 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Asia-Pacific Economic Cooperation Group of 21 nations ringing the Pacific Ocean that accounts for over half of world trade 1. Not designed as a free-trade bloc 2. Strengthen multilateral trade system 3. Liberalize trade and investment rules
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8 - 22 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Key Points: Australia and New Zealand Eliminated trade barriers 5 years early Recognize each other’s qualified professionals Closer Economic Relations Agreement
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8 - 23 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Middle East Gulf Cooperation Council Six Arab nations (1980) Economic and political aims Travel freely without visas Cooperation on property rights
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8 - 24 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Economic Community of West African States Some progress on migration, roads, and telecoms Impaired by instability, poverty, and bad policies African Union Joined 53 nations in 2002 Want united and strong Africa Seek peace, security, stability Africa
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