II. REGIONAL ECONOMIC INTEGRATION AND TRADE BARRIERS 1
Dec 19, 2015
II.REGIONAL ECONOMIC
INTEGRATIONAND
TRADE BARRIERS
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TRADE RESTRICTIONS:COMMON BARRIERS TO TRADE
• TRADE RESTRICTIONS– Common Forms of Barriers
• Tariffs• Subsidies• Quotas• Embargoes
– Nontariff Barriers• Exchange Controls• Foreign Capital Controls
TRADE RESTRICTIONS
• REASONS FOR BARRIERS– Host Government’s View
• Protecting Importing firms• Promoting import substitution• Self sufficiency• Encouraging local and FDI• Promoting export-based growth• Promoting infant industries
PROCESS OF INTEGRATION
• Regulated trade
• Free Trade Association
• Customs Union
• Common market
• Trade Union
• Complete economic integration
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REGIONAL ECONOMIC INTEGRATION
• ECONOMIC INTEGRATION– Purpose
ECONOMIC INTEGRATION
Most Important Examples Today:
European Union (EU)
North American Free Trade Association (NAFTA)
World Trade Organization (WTO)
EUROPEAN UNION
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Political
EU Parliament – Currently 785 MEPs.
Based in France, Belgium and LuxembourgPasses laws, monitors budget, monitors EU institutions
EU CouncilMinisterial representations from each member state
Passes laws, approves EU budget, co-ordination of economic policies, develops foreign policy, co-ordinates anti-crime strategies
EU Commission20 Commissioners appointed by each member state every 5
yearsProposes legislation, Implements EU policies, law enforcement, international co-ordination
Financial
European Central Bank
inflation target of less than 2% per year, sets short term interest rates for the whole eurozone area, Implements and monitors Eurozone monetary policy
European Investment Bank – owned by member states. Raise finance through financial markets, Invest in projects to promote aims of EU –
large scale projects
Court of Auditors
monitors legality and efficiency of EU income and expenditure
Legal
Court of Justice one judge from each member state
Interprets and applies EU legislation
Member States pre-Enlargement
Enlargement - New Members
Cyprus
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Malta
Poland
Slovakia
Slovenia
Activities
Agriculture
• CAP – Common Agricultural Policy– Sustainablility– Food Quality– Animal Welfare– Food Safety– Control– Farmers welfare/incomes– Employment in agriculture
Fisheries
• CFP – Common Fisheries Policy– Conservation
of fish stocks– Aid to fishing industry to
cope with changing circumstances
– Monitor supply and demand for fish
– Negotiate with non-EU members on fishing issues
Regions• European Regional Development Fund• European Social Fund• European Agricultural Guidance and Guarantee Fund• Financial Instrument for Fisheries Guidance
– Aims to encourage development of poorer regions– Increase employment opportunities– Encourage new industry to locate in areas
of structural decline– Develop infrastructure in poorer regions– Encourage new training methods and facilities
Finance/Economics
• Euro – monitor introduction and development
• Tax Harmonization – reduce differentials in tax regimes throughout the single market to aid competition and transparency
• Single Market – free movement of goods, services, labor and capital between member states
NAFTA
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NAFTA
Effective as of January 1, 1994
A trade agreement between CANADA, MEXICO, and the UNITED STATES which provides for the elimination of tariffs on North American goods shipped between the three countries.
MEXICO: Lower inflation and foreign debt
create more well-paying jobs for Mexicans
producing less incentive for Mexicans to work illegally in the U.S. become a richer market for American exporters.
Expectations and Goals
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UNITED STATES: solidify an expanding trade relationship
spur job creation at home
help to continue the revolutionary shift throughout Latin America away from state controlled markets toward freer markets.
Expectations and Goals
Mid-Continent
International
Trade Corridor
1. A trade pattern
2. A system of connecting highways and rail routes
3. An opportunity to strengthen economic development in a region
GATT/WTO
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GATT/WTO
GATT - General Agreement on Tariffs and Trade (1946)Facilitated rounds of multilateral trade negotiations:– Trade ministers met regularly for future rounds of multilateral negotiations.
– When the ministers thought the time was right, they
scheduled the next round.
– 8 rounds of negotiation were completed under the GATT,
most recently the Uruguay round (completed 1993, signed in
1994). These brought down tariffs considerably.
– The Uruguay round created the World Trade Organization,
which replaced the GATT
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World Trade Organization
History of the WTO/GATT1. Specified general obligations that all signatories must observe
Countries are permitted to protect own producers from
“unfairly priced” imports:
– Anti-dumping duties
– Countervailing duties (to offset foreign subsidies)
2. A country that believes it has been harmed because
another country has violated GATT rules can request
arbitration and consultation.
– Failing resolution, panel of experts convened to issue a ruling
– This ruling can be unilaterally vetoed
World Trade Organization
TRIPS Agreement attempts
to narrow the gaps in the way intellectual property rights are protected around the world
to bring them under common international rules.
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