Chapter 8
Order by
33 terms
Terms | Definitions |
|---|---|
 Regional economic integration | refers to agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other |
| Free trade area | all barriers to the trade of goods and services among member countries are removed but members determine their own trade policies with regard to nonmembers |
| Customs union | eliminates trade barriers between member countries and adopts a common external trade policy |
| Common Market | no barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production |
| Economic union | involves the free flow of products between members, the adoption of a common external trade policy, and in addition, a common current, harmonization of the member countries' tax rates, and a common fiscal policy; common currency, too |
| Political Union | independent states are combined into a single union |
| Two main impediments for integration | o Can be costly: while a nation as a whole may benefit, certain groups may lose o Can result in a loss of national sovereignty |
| Case against regional integration | Only makes sense when the amount of trade it created exceeds the amount it diverts Trade Creation Trade Diversion |
| Trade Creation | occurs when low cost producers within the free trade area replace high cost domestic producers |
| Trade Diversion | occurs when higher cost suppliers from the trade area replace lower cost external suppliers |
| Two European trade blocs | o EU with 27 members o European Free Trade Association with 4 members (Norway, Iceland, Lietchtenstien, Switzerland) |
| EU is the result of | o The devastation of two world wars and desire for peace o Desire by Euro nations to hold their own on world stage |
| Treaty of Rome | 1957 treaty that established the European Community (Later became the EU) |
| Four main institutions of the EU | o European Commission o European Council o European Parliament o Court of Justice |
| European Commission | Body responsible for proposing EU legislation, implementing it, and monitoring compliance |
| European Council | The ultimate controlling authority within the EU |
| European Parliament | Elected EU body that consults on issues proposed by the European Commission |
| Court of Justice | Supreme appeals court for the EU |
| Treaty of Lisbon | Signed in 2007, made the European parliament the co-equal legislator for almost all european laws and created the position of the president of the European Council |
| Single European act | (1987) committed EC countries to work toward establishment of single market by 1992 |
| Maastricht Treaty | (1991) committed EU members to adopt the euro, now used by 16 of 27 members |
| Optimal currency area | one where similarities in the underlying structure of economic activity make it feasible to adopt a single currency |
| Economic Integration Groups in the Americas | • NAFTA • Andean Community • MERCOSUR • Free Trade Area of the Americas is in discussion • Smaller pacts: o Central American Trade Market o CARICOM |
| NAFTA (North American Free Trade Agreement) | Free trade area between US, Canada and Mexico |
| Andean Pact | A 1969 agreement between bolivia, chile, ecuador, colombia, and peru to establish a customs union |
| MERCOSUR | Pact between Brazil, Argentina, Paraguay and Uruguay to establish a free trade area (1988) |
| Central American Common Market | Trade pact between Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Began in early 1960s but collapsed in 1969 due to war |
| Central America Free Trade Agreement (CAFTA) | Agreement of member states of the Central American Common Market joined by the Dominican Republic to freely trade with the US (2005) |
| CARICOM | An association of english-speaking Caribbean countries that are attempting to establish a customs union (1973) |
| Integration in Asia | o Association of Southeast Asian Nations o Asia-Pacific Economic Cooperation |
| Association of Southeast Asian Nations (ASEAN) | An attempt to establish a free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam (1967) |
| Why is integration important to international companies? | • Markets that had been protected are now open o Particularly with EU and NAFTA • Likely to increase competition |
| Asian Pacific Economic Cooperation (APEC) | Made up of 21 member states whose goal is to increase multilateral cooperation in view of the economic rise of the pacific nations (1990) |
First Time Here?
Welcome to Quizlet, a fun, free place to study. Try these flashcards, find others to study, or make your own.