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, 2000
Ch.6: International Environment:
Regional Political & Economic
Integration

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Levels of Economic Integration
Free
Trade
Area
Customs
Union
Common
Market
Economic
Union
Political
Union
NAFTA
EU 1992
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Economic Case for
Regional Integration
Stimulates economic growth in countries
Countries specialize in those goods and
services efficiently produced.
Additional gains from free trade beyond
international agreements such as GATT and
WTO.
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Political Case for
Economic Integration
Economic interdependence creates incentives
for political cooperation and reduces potential
for violent confrontation.
Together, the countries have the economic
clout to enhance trade with other countries or
trading blocs.
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Political World Map
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Regional Economic Integration
Agreements among countries in a
geographic region to reduce, and ultimately
remove, tariff and nontariff barriers to the
free flow of goods, services and factors of
production among each other.
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The European Union [EU]
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Map
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European Union and the US
(April, 1998)
Europe* USA
Population (mm) 300 267.7
% of World GDP
19.4% 19.6%
% of World Trade
18.6% 16.6%
GDP Growth
2.4% 3.8%
Budget Balance
as % of GDP
- 2.8% 0
*Countries likely to be part of common currency: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, Netherlands, Portugal and Spain.
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EU Governance
Heads of State
and
Commission
President
1
representative
from each
member
20 Commissioners
appointed by
members for
4 year terms
European Council
Resolves policy issues
Sets policy direction.
European Commission
Proposing,
implementing,
monitoring legislation.
Council of Ministers
Ultimate controlling authority.
No EU laws w/o approval.
European Parliament
630
directly
elected
members
Propose amendments to
legislation, veto power
over budget and single-
market legislation,
appoint commissioners.
1 judge
from each
country
Court of Justice
Hears
appeals of
EU Laws.
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Map
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North American Free Trade
Agreement
Became law: January 1,1994
Over 15 year period:
tariffs reduced (99% of goods traded)
NTBs reduced
investment opportunities increased
Protects intellectual property
Applies national environmental standards
Special treatment for many industries
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Andean PACT
Map
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ANCOM: Andean Pact
Bolivia, Colombia, Ecuador, Peru,
Venezuela
Cartagana Agreement, 1969. One of oldest
still in existence
Population: 97 mm (14% of hemisphere)
GNP: $122.6 billion
Changed from FTA to customs union in
1992
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Mercosur
Map
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The Mercosur Accord
1988: Argentina, Brazil. 1990: Paraguay,
Uruguay
1995: Agreed to move toward a full
customs union.
Population: 209 mm (27% of hemisphere)
GNP: $656.6 billion (8% of hemisphere)
Trade doubled in first 3 years
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Other Hemisphere Associations
Central American Common Market
CARICOM
Free Trade Area of the Americas

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ASEAN
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Association of Southeast Asian
Nations
Created in 1967
400 million citizens
Economic, political and social cooperation
Brunei, Indonesia, Malaysia, the
Philippines, Singapore, Thailand and
Vietnam.
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Map
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Asia Pacific Economic Cooperation
Founded in 1989 to promote open trade
and practical economic cooperation.
Promote a sense of community.
18 members
GDP: $13 trillion (1995)
50% of total world income
40% of global trade