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Ch.6: International Environment:Regional Political & Economic
Integration
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Levels of Economic Integration
Free Trade Area
Customs Union
Common Market
Economic Union
Political Union
Level of Integration
NAFTA
EU 1992
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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.
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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.
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Political World Map
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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.
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The European Union [EU]
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European Union and the US(April, 1998) Europe* USA
Population (mm) 300 267.7% of World GDP 19.4% 19.6%% of World Trade 18.6% 16.6%GDP Growth 2.4% 3.8%Budget Balanceas % of GDP
- 2.8% 0
*Countries likely to be part of common currency: Austria, Belgium, Finland, France, Germany, Ireland, Italy,Luxembourg, Netherlands, Portugal and Spain.
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EU Governance
Heads of State and
CommissionPresident
1 representative
from each member
20 Commissioners appointed by members for 4 year terms
European Council
Resolves policy issues Sets policy direction.
European Commission Proposing,
implementing, monitoring legislation.
Council of MinistersUltimate controlling authority. No EU laws w/o approval. European
Parliament
630 directly elected
members
Propose amendments to legislation, veto power over budget and single-market legislation, appoint commissioners.
1 judge from each country
Court of Justice
Hears appeals of EU Laws.
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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
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Andean PACT
Map
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ANCOM: Andean Pact Bolivia, Colombia, Ecuador, Peru,
Venezuela Cartagana Agreement, 1969. One of oldest
still in existence Population: 97 mm (14% of hemisphere) GNP: $122.6 billion Changed from FTA to customs union in
1992
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Mercosur
Map
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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
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Other Hemisphere Associations
Central American Common Market CARICOM Free Trade Area of the Americas
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ASEAN
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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.
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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
