Ch.

6: International Environment: Regional Political & Economic Integration

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Levels of Economic Integration

Political Economic Union NAFTA Common Union Free Customs Market Union Trade Area 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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Map

European Union and the US (April, 1998)

Europe* Population (mm)
% of World GDP % of World Trade GDP Growth Budget Balance as % of GDP

USA 267.7 19.6% 16.6% 3.8% 0

300 19.4% 18.6% 2.4% - 2.8%

*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
European Council
Heads of State and Commission President
Resolves policy issues Sets policy direction.

European Commission
20 Commissioners appointed by members for 4 year terms Proposing, implementing, monitoring legislation.

Council of Ministers European Parliament

630 directly elected members 1 representative from each member Ultimate controlling authority. No EU laws w/o approval.

Court of Justice
1 judge from each country Hears appeals of EU Laws.

Propose amendments to legislation, veto power over budget and singlemarket legislation, appoint commissioners.

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Map

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

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Map

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

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Map

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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Map

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
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