7- 1 Chapter 8 Cross-National Cooperation and Agreements

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7- 1 Chapter 8 Cross-National Cooperation and Agreements




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Presentations text content in 7- 1 Chapter 8 Cross-National Cooperation and Agreements

Slide1

7-1

Chapter 8

Cross-National Cooperation and Agreements

Slide2

Copyright © 2015 Pearson Education, Inc.

7-2Learning Objectives

Discuss the three major approaches to economic integration

Identify the major characteristics and challenges of the World Trade Organization

Discuss the pros and cons of

global (the WTO),

bilateral, and regional

integration

Identify how the different approaches to economic integration can be a free trade agreement, a customs union, or a common market

Slide3

Learning ObjectivesDescribe the static and dynamic impact of trade agreements on trade and investment flows

Compare and contrast different regional trading groupsDescribe other forms of global cooperation such as the United Nations and OPEC Copyright © 2015 Pearson Education, Inc. 8-3

Slide4

Copyright © 2015 Pearson Education, Inc.

7-4Introduction

Economic integration

the political and monetary agreements among nations and world regions in which preference is given to member countries

Bilateral integration

Regional integration

Global integration

Slide5

Copyright © 2015 Pearson Education, Inc.

7-5The World Trade Organization

World Trade Organization (WTO)

The major body for

reciprocal trade

negotiations

Reciprocal

trade agreement, international commercial treaty in which two or more nations grant equally advantageous trade concessions to each other. It usually refers to treaties dealing with tariffs. For example, one nation may grant another a special schedule of tariff concessions in return for equivalent advantages. Originally reciprocity agreements involved bilateral tariff reductions that were not to be extended to third countries.

Slide6

Copyright © 2015 Pearson Education, Inc.

7-6The World Trade Organization

World Trade Organization (WTO)

The major body for

reciprocal trade negotiations

enforcement of trade agreements

General Agreement on Tariffs and Trade (GATT)

Slide7

Copyright © 2015 Pearson Education, Inc.

7-7GATT: Predecessor to the WTO

GATT

formed in 1947 to abolish quotas and reduce tariffs

Most favored nation (MFN) clause

trade without discrimination

Ran into problems:

Craftier complex methods of trade protection

Trade in services grew exponentially

Succeeded

by WTO in 1995

Slide8

Copyright © 2015 Pearson Education, Inc.

7-8What Does The WTO Do?

WTO

continues the MFN clause of GATT

provides a mechanism for dispute settlement

Doha Round

agricultural subsidies

Criticized for

failing to pay enough attention to labor and environmental concerns

undermining global diversity

benefitting rich at the expense of the poor

Slide9

Copyright © 2015 Pearson Education, Inc.

7-9The Rise Of

Bilateral Agreements

Bilateral agreements

can be between two individual countries or can involve one country dealing with a group of other countries

Also known as

Preferential trade agreements (PTAs

)

A preferential trade area (also preferential trade agreement, PTA) is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely. A PTA can be established through a trade pact.

Free trade agreements (FTAs)

Slide10

Copyright © 2015 Pearson Education, Inc.

7-10The Rise Of

Bilateral Agreements

Also

known as

Free

trade agreements (FTAs

)

free

-

trade

 area is the region encompassing a 

trade

bloc

whose member countries have signed a 

free trade agreement

 (

FTA

). Such 

agreements

 involve cooperation between at least two countries to

reduce

trade

 barriers – import quotas and tariffs – and to increase 

trade

 of goods and services with each other.

Slide11

Copyright © 2015 Pearson Education, Inc.

7-11Regional Economic Integration

Regional trade agreements

integration confined to a region and involving more than two countries

Examples include

European Union (EU)

European Free Trade Area (EFTA)

North American Free Trade Area (NAFTA)

Association of Southeast Asian Nations (ASEAN)

Common Market of Eastern and Southern Africa (COMESA)

Slide12

Copyright © 2015 Pearson Education, Inc.

7-12Regional Economic Integration

Major types of economic integration

Free trade area

no internal tariffs

Customs union

no internal tariffs plus common external tariffs

Common market

customs union

plus factor mobility

Slide13

Copyright © 2015 Pearson Education, Inc.

7-13The European Union

European Union (EU)

changed from the European Economic Community to the European Community to the European Union

the largest and most successful regional trade group in the world

provides free trade of goods, capital, and people

uses common external tariffs

has a common currency

Slide14

Copyright © 2015 Pearson Education, Inc.

7-14The European Union

Companies doing business in the EU need to

determine where to produce products

determine what their entry strategy will be

balance the commonness of the EU with national differences


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