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•Stimulated business
environment
•More jobs
Financial Forecasts
Plans Completed
Including
•Conduct of Business by
Investment firms
•Accounting Standards
• Bank Legislations
Setbacks
Cross Border
Acquisitions
National
Governments
reserved the
rights for
friendly cross
border mergers
Future Changes
The Agreements among countries in a geographic
region to reduce, and ultimately remove tariff and non
tariff barriers to the free flow of goods, services and
factors of production between each other
The Contribution of WTO
and GATT in Regional Trade
Other Regional Trade Agreements
The European Union has been
the most significant and
Successful in the past decade
Steps:
•Removed
Transit Trade
•Launched a
single currency
•Closer
Political Union
•More
members:
From 15 to 25
(May 2004)
• Linguistic
• Social
• Cultural
Other Trade Agreements
• NAFTA
• MERCOSUR
• APEC
Regional Bloc theory
Consequence
•High Tariff
CUSTOMS UNION:
Eliminates trade
barriers between
member-countries
and adopts a
common external
trade policy.
Eg: Andean Pact
LEVELS OF ECONOMIC INTEGRATION
COMMON MARKET:
The theoretically ideal common market has no barriers to
trade between member-countries and a common external
trade policy. Unlike in a customs union, in a common
market factors of production also are allowed to move
freely between member-countries. Thus, labour and capital
are free to move, as there are no restrictions on
immigration, emigration, or cross-border flows of capital
between member-countries.
LEVELS OF ECONOMIC INTEGRATION
ECONOMIC UNION:
An Economic Union involves the free flow of
products and factors of production between
member-countries and the adoption of a common
external trade policy. A full economic union also
requires a common currency, harmonization of the
member-countries tax rates and a common
monetary and fiscal policy.
THE ECONOMIC CASE FOR INTEGRATION
Incentives are
created or political
cooperation between
neighboring states
By grouping their
economies together,
the countries can
enhance their
political weight in the
world.
IMPEDIMENTS TO INTEGRATION
•Costs
•Painful adjustments in
certain segments of
economy
TRADE CREATION
Occurs when high-cost domestic
producers are replaced by low-
cost external suppliers within
the free trade area.
TRADE DIVERSION
Occurs when lower-cost
external suppliers are
replaced by higher-cost
suppliers within the free
trade area.
• European Union
• European Free
Trade Association
Evolution European Union
The devastation of western
Europe during two world
wars and the desire for long
lasting peace
The European Union’s desire
to hold their own world’s
political and economic stage
1981: Greece
•abolish restrictions on
cabotage
• Application of national
environmental standards that have
scientific basis.
• Establishment of commissions to
ensure compliance to environmental
standards and labor regulations.
• Originated in 1988 as a
free trade pact between
Brazil and Argentina.
• Modest reduction in
tariff and quota, helped
bring an increase of 80%
in trade between the two
countries in late 1980s
MERCOSUR
• The success encouraged
to include Paraguay and
Uruguay in March 1990.
MERCOSUR countries
may not be able to
compete globally.
• MERCOSUR hit a significant roadblock in
1998 when its member states slipped into
recession and intrabloc trade slumped.
ASEAN APEC
ASEAN
(ASSOCIATION OF SOUTHEAST ASIAN NATIONS)
Formed in August 8th 1967.
Last MEETING held on Hanoi (Vietnam)
MEMBER COURTIERS OF ASEAN
AIM & PURPOSE
ASEAN MOTTO
ASEAN FLAG
AFTA
• Protection against
foreign Competition.
REGIONAL TRADE BLOCS IN AFRICA
• Free trade movement in
2001.
• Increased Price
competition.