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Economic Integration and Cooperation (European Union (Schengen area, The…
Economic Integration and Cooperation
Economic integration : political and monetary agreements among nations and world regions. Three major ways to approach such agreements
Global integration
Bilateral integration
Regional integration
The World trade organizatIon—global
IntegratIon
GATT
23 countries
Reduce tariffs
Abolish quotas
1995 -> GATT-> OMC --> 125 members
Each member nation: open its markets equally to every other member nation.
WTO
159 members
97 percent of world trade
Member countries should trade without discrimination
Regional economic integration
Reciprocal pacts between two or more partners that lie some- what between bilateral and global integration agreements
Geography matters
Neighboring countries may have common histories and interests
Neighboring countries often share a common history, language, culture, and currency.
Close proximity reduces transportation costs
The effects of integration
Trade impact
Investment impact
Trade barriers drop for member counties
Market size increase
Trade barriers
remain higher for nonmember countries
NAFTA
Effective: 1984
Logical rationale: geographic location and trading importance
Etats unis, canada, Mexique
Free trade agreement in goods and services
In Americas
Mercosur
1991 by Brazil, Argentina, Paraguay, and Uruguay
Goal -> customs union with free trade within the bloc and a common external tariff
Caribbean community ( CARICOM)
Full movement of goods and services
Right of establishment
Common external tariff
Free movement of capital and labor
Pacific alliance
Andean community (can)
Asia
ASEAN
1967
Preferential trade
APEC
21 countries
Trans pacific partnership
African Union
Three regional monetary unions
Five existing regional trade associations
Every country in Africa except Morocco
2002
Promote peace / security through openness and democracy
United Nation
1945
Response to the devastation of World War II
International peace
Security
European Union
Schengen area
The single european act and the lisbon treaty
28 members
Common currency -> €
Internal tariffs
Eventually established an external tariff