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CHAPTER 12 : TRADING BLOCS, ex : - Coggle Diagram

- - - - Free trade area
      - Customs union
      - Single / common market
      - Monetary union
  - - - “ a grouping of countries within which tariffs and non-tariffs trade barriers between the members are generally abolished but with no common trade policy toward non-members”
      - ⇒ it’s an area where member states remove tariffs and quotas between themselves, and maintain restrictions with non-member countries. (restriction may be different between countries)
      - The producer can acquire a larger market of potential customers
    - - member : USA, Canada and mexico
    - - Norway, Iceland, Switzerland and Liechtenstein
    - - entered into force on sept 21 2017) between EU and Canada
  - - - no tariffs, no quotas between member countries
      - common external tariffs and quotas with non-member countries
    - - common system of taxation : identical tax rates in all member states (ICO perfect common market)
      - common laws and regulations : for production, employment (no children), and trade
      - free movement of : labour, capital, materials, g&s
      - fixed exchange rate between currencies
      - single currency (e.g € in EU)
      - common macroeconomic policies
    - - Absence of border control between members
      - Freedom of workers ) work in country part of the common market
      - Freedom of firms = expand into any member state
- - - - Increase in market size
      - Development economic & technical cooperation = reaching economies of scale
      - Developing trade : reinforces political stability in the region. The whole trading bloc = more bargaining power than a single country (more power, gain better deals)
      - Bargaining power of the union with the rest of the world = allows member states to gain better terms of trade.
  - - - serves economic interests of member stats
      - reinforces political stability
  - - - leads to oligopolistic collusion
      - higher pricer for consumers
      - can lead to mergers, takeovers, monopolies
  - - - trade creation
        
        trade creation = trade agreements especially tariff agreements that would be a shift (=changement) in consumption
        
        domestic high costs producer to a foreign low-cost producer = reduction in tariff barriers
        
        consumers : stop paying high prices of domestic goods
        
        Pay lower prices for foreign goods (cf ex 1)
      - trade diversion
        
        trade diversion = détournement des échanges
        
        When tariffs agreements leads to a consumption shift
        
        The switch of : lower cost producers outside the trading bloc --> higher-cost producer (but tariff-free) within the trading bloc
        
        cf exemple 2
- - - - french farmers have a lot of regulations
      - Fear of unfair competition : canadians can use products and farming methods that are banned in France. So it's a considerable distortion of the competition.
      - ⇒ OGM, pesticides
  - - - promote cultural economic and political develpment in the region
      - Increase regional welfare (economically & culturally) through cooperation
      - form a common market similar to the European union
    - - the original : indonesia, singapore, malaysia, Phillippines and Thailand
      - the other who came after : Brunei, Cambodia, Laos, Myanmar, Viet Nam
    - - Goods and services
      - Capital
      - Labour (people/main d’oeuvre)
    - - agriculture
      - financial services
      - intellectual property rights
      - consumer protection
  - - - venezuela joined in 2012 (but has been suspended since December 20216 because of the failure to comply (=se conformer) and bloc's trade obligation)
      - Bolivia : candidate member, he complies with the accession procedure and should join in the future (give the green light in 2023)
  - - - Original members : france, italy, luxembourg, belgium, netherlands, west germany, pooled (=mettre en commun= coal and steel production
      - established in 1952 and it removed trade restriction between member states
      - purpose :
        
        economies of scale,
        
        competition to the US and other foreign producers,
        
        European integration.
        
        ⇒ Promote peace between the members and prevent war notably with the pooling of coal and steel production
      - 1957 EEC : European Economic Community (treaty of rome) ==> create a common market pooling resources
        
        free trade of :
        
        Movement
        
        Labour
        
        Enterprise
        
        capital
        
        1968 they decided to abolished all internal tariffs and create CET (Common External Tariffs)
        
        The EEC was a customs union because they capt in the legal fiscal and administrative restriction
      - european coal and steel community
    - - 1993 EEC become EU with the Maastricht Treaty
      - Signed in feb 1992 and become effective in nov 1993
        
        Common policies
        
        ce qui découle du traité et ce qui a fait que l'eec est devenue l'ue
      - 3 example : common agricultural policy, harmonisation of taxation (VAT = Value Added taxes), social policies
        
        common agricultural policy (1962) : ensure food supplies for europe, fair income for european farmers, now : agricultural subsidies to support farmers
        
        Theses subsidies are very important because farmers are facing issues :
        
        Falling farm incomes
        
        Increase of global food production
        
        Unstable farm prices ( ⇒ cause their supplies are subject to a random supplies chocks, like poor weather and disease)
        
        Large supermarket chains who have take the power and push farm prices down
        
        Harmonisation of taxation :
        
        VAT (value added tax)
        
        Standard form of indirect tax throughout EU
        
        Substantial differences in VAT rates
        
        Examples : VAT standard rates in Europe
        france = 20%
        Danemark = 25 %
        Luxembourg = 17%
        
        Social policy :
        
        Social charter in 1989, about worker and social rights should appy in all members states
        
        ex : decent income for both emplyed and free dom of mov to belong to a trade union
        
        recommendations included social chapter of the maastricht treaty
        
        John Major was the PM who replace Margaret thatcher and refuse the british conservative gov --> increase production costs and european goods were less competitive
        
        1997 : signature by labour gov (tony blair)
        
        1992/93 : creation of the single market : cost and benefits are difficult to qualify but identifiable
    - - Trade creation
        
        In which g&s countries should specialise ?
        
        production at comparatively cost
      - Reduction of direct costs of barriers
        
        abolition / harmonisation : administrative costs, border delay, technical regulation : substantial costs saving
      - Economies of scale
        
        European scale expansion
        
        Growth = economies of scale
      - Greater competition
        
        Increased competition in :
        
        lower costs
        
        lower price
        
        larger product range (transports, financial services, telecommunication)
    - - economies of scale = redundancies :
        
        bankruptcies
        
        takeovers
        
        new technologies (threat to employment)
      - Firms location = closer to their market centers
        Removal of barriers = market = Europe
      - The single market attracts jobs from edges (=bord) of union to its geographical centers
      - Free movement of capital : lead to a large European mergers (=fusion) = collusive or monopolistic practices
      - The cause of the Brexit :
        
        loss national sovereignty
        
        intervention at a microeconomic level = difficult for gov
        ==> ils peuvent implémenter plein de loi que sous l'UE serait interdit (si un immigrant arrive en UK ils les renvoient au Rwanda)