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GLOBAL TRADE AND INTEGRATION - Coggle Diagram
GLOBAL TRADE AND INTEGRATION
FREE TRADE
The benefits of free trade
Bringing people together across distance and cultures, leading to peace
Making everyone wealthier
Restraining the power of the state and empowers individuals
Encouraging basic human rights
Governmental policies supporting trade
Free trade zones
- Areas have separate laws to encourage trade
Comparative advantage
The ability to produce a particular good or service at a lower opportunity cost than its trading partners and export that good or service
Governmental Forms - Considering types of governmens when conducting international trade
Absolute advantage
Each country specializes in the production and exchange of products whose costs of production are significantly lower than that of other countries and below the international average. All countries involved benefit
INTEGRATION
Reasons for integration success
Historical events and divergent culture can make increasing ties with neighbors more difficult
The movement of resources across country borders
Building skills and commitment to the integrative process based on successful past integration
Physical distance Increasing natural advantage for trade between closer countries
Levels of integration
Economic union
- The union attempts to follow the same economic policy
Political union
- The complete integration of political and economic policy, represents the final step before the creation of a new country
Common market
- Removing barriers to trade within the market
Custom union
- Producing a more integrated agreement between countries
Free trade area
- Areas are created to reduce tariffs, quotas and other barriers to the movement of goods or services
Integration trends
Outsourcing
- Hiring an external third party to conduct the process
Bottom-of-the-Pyramid
- Targeting bottom-of-the-Pyramid consumers and for those consumers to obtain access to additional goods and services
Offshoring
- Using third party when entering a foreign country
INTEGRATION IN THE AMERICAS
Southern cone common market (MERCOSUR)
Seeking the eventual elimination of barriers to trade, development of joint policies toward nonmembers
Beef exporting and MERCOSUR: trade faces barriers. Still, the size of the market large, MERCOSUR has the potential to gain in influence
North American free trade agreement
North American free trade association (NAFTA) with three member states of Mexico, Canada and The United States.
NAFTA boosted trade by eliminating all tariffs between the three countries
Beef exporting and NAFTA gives members a large cost advantage. All foreign producers of beef outside NAFTA face tariffs and quotas.
Andean community
Joining the Union of South American Nations (UNASUR) in 2004. The goals of organization are mainly political
Beef exporting and the Andean community: exporting faces fewer hurdles than exporting to MERCOSUR
Other trade organization or agreements
In 2004, Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)
In 1965, The Caribbean Free Trade Association (CARIFTA). In 1973, CARIFTA changed to the Caribbean Community (CARICOM)
In 2001, CARICOM Single Market and Economy (CSME): eight Carribbean countries share a currency (Eastern Caribbean dollar) through Eastern Caribbean Central bank
LEGAL AND ETHICAL ISSUES
The Anti-Boycott Law to prohibit U.S. companies and citizens participating in any foreign country-sponsored boycott
Antitrust laws to prevent monopolies (Ex: the Sherman Act and the Clayton Act in U.S.)
In 1998, an amendment to the law increased its coverage
Acting to prevent the export of technologies related to national security and broader political interests
In 1977, the Foreign Corrupt Practices Act – apply to activities of American bussiness people while abroad
Extraterritoriality – Laws outside of country borders
THE WORLD TRADE ORGANIZATION AND INTEGRATION
Tariff Rates
The WTO helped set tariffs and put a lot of emphasis on transparency
Dispute resolution
The WTO does not have a good ability for members and organizations to allow tariffs
Most-Favored-Nation Status
Basic components of WTO membership. All countries have their own rules and must be treated equally
The Future
Doha negotiations with the goal of more open to trade liberalization.
Where individuals feel their voices are not being heard, WTO meetings allow the powerful to make decisions that hurt the weak
The WTO is focused on opening-up trade so that barriers can be set up and epidemics contained between 153 member countries
BEEF EXPORTS AND INTEGRATION
The European Union has helped lead integration.
Infrastructure dictates the ease with which beef can be moved
Language dictates what types of beef are sold
Economic systems lead to situations
EUROPEAN INTEGRATION
The European Union
The 1980s
: The Single European Act
The Berlin Wall fell -> The collapse of Soviet Union
The 1990s
: The EEC renamed the European Union (EU) -> EU agreed on the four freedoms
A common curency - The Euro
The 1970s
: Three countries joined and environmental protection laws were introduced
The direct election of leaders of the EEC
The New Millennium
Coins and notes began circulation
The European Constitution
The 1960s
: The European international community has taken steps to rapidly increase relations among its members.
Organization of The European Union
The European Council has no formal power, however, its leaders often direct the EU's agenda.
The European Union constitutes the world's most integrated union of countries
Beef Exports in The European Union
The degree of economic and political integration in Europe affects marketing. The EU is open to most items; when the market is closed, foreign businesses lose great export opportunities.
Other European Trade Organizations
The European Free Trade Association (EFTA)
The Commonwealth of Independent States
The Central European Free Trade Agreement
INTEGRATION IN ASIA, AFRICA, AND THE MIDDLE EAST
Trans-Pacific Strategic Economic Partnership Agreement
The US government is increasingly looking to Asia for exports and growth in order to promote overall development.
South Asian Association for Regional Cooperation
SAARC has eight members. Political conflicts among SAARC countries hinder the integration process.
Asia-Pacific Economic Cooperation
APEC connecting group, encouraging dialogue between members
Beef Exports in Asia
The export of goods to Southeast Asian countries faces many obstacles. Beef is also the focus of protests in many countries in the region.
Association of Southeast Asian Nations Free Trade Area
ASEAN focuses on political alliances, defense, culture and education
Integration in The Middle East and Africa
Middle East
: The council focuses on many issues that extend beyond trading and down to economic integration.
Africa
: The Abuja Treaty with the goal of establishing an African economic community.
West African Monetary Union to create a common currency, calms the ecosystem.
Beef Export in Africa
: Exporting beef will encounter some obstacles.
Limited and inconsistent trade integration in the region.
PROTECTIONISM VS. FREE TRADE
Arguments for Protectionism
Focus on protecting a country's well-being
Environmental and Sustainability Issues
: Sustainability increasingly becomes the driving force for governments, citizens and many businesses, the divergence between environmental regulations in countries is increasingly attracting attention.
The Future
Debates regarding free trade and protectionism are likely to continue.
Government Polices Limited Trade
Governments employ variety of different tools or devices to reduce imports