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Transcript of 10-1 chapter 10 International Cooperation Among Nations International Business, 6th Edition...
10-1
chapter 10
International Cooperation
Among
Nations
International Business, 6th E
dition
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
Griffin & Pustay
10-2
Chapter Objectives
• Explain the importance of the GATT and the WTO to international business
• Contrast the different forms of economic integration among cooperating countries
• Analyze the opportunities for international businesses created by completion of the EU’s internal market
• Describe the other major trading blocs in today’s world economy
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
10-3
General Agreement on Tariffs and Trade
• Developed as part of the Havana, Cuba, conference in 1947
• Provided forum for trade ministers to discuss barriers to international trade
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10-4
The Role of the GATT
The GATT’s goal was to promote a free and competitive international
trading environment benefiting efficient producers by sponsoring multilateral negotiations to reduce tariffs, quotas, and other nontariff
barriers
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10-5
Table 10.1 GATT Negotiating Rounds
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10-6
Most Favored Nation (MFN) Principle
The most favored nation principle requires that any preferential treatment
granted to one country must be extended to all countries.
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10-7
Exceptions to the MFN Principle
• Members permitted to lower tariffs to developing countries without lowering them for more developed countries
• Regional arrangements promote economic integration (e.g., EU and NAFTA)
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
10-8
Goals of the World Trade Organization (WTO)
• Promote trade flows by encouraging nations to adopt nondiscriminatory, predictable trade policies
• Reduce remaining trade barriers through multilateral negotiations
• Establish impartial procedures for resolving trade disputes among members
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
10-9
Differences between WTO and GATT
• GATT focused on promoting trade in goods; WTO’s mandate includes:
– trade in goods
– trade in services
– international intellectual property protection
– trade-related investment
• WTO’s enforcement powers are stronger
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10-10
Figure 10.1 The WTO’s Principles of the
Trading System
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10-11
WTO Challenges
• The Cairns Group
• Multifibre Agreement
• General Agreement on Trade in Services (GATS)
• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
• Trade-Related Investment Measures Agreement (TRIMS)
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10-12
Enforcement of WTO Decisions
• Country failing to live up to the agreement may have a complaint filed against it
• WTO panel evaluates complaint
• If found in violation, the country may be asked to eliminate the trade barrier
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10-13
Forms of Economic Integration
Free Trade Area
Common Market
Economic Union
Customs Union
Political Union
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10-14
Figure 10.2 Forms of Economic Integration
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10-15
European Union (EU)
• Most important regional trading bloc
• 27 member countries
• 491 million population
• Combined GDP of $14.4 trillion
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10-16
Map 10.1 The European Union
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10-17
Governing Organizations of the EU
• The Council of the European Union
• The European Commission
• The European Parliament
• The European Court of Justice
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10-18
The European Parliament shares responsibility The European Parliament shares responsibility for adopting the EU’s budget with the for adopting the EU’s budget with the European CommissionEuropean Commission
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10-19
Figure 10.3 The Co-Decision Procedure
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10-20
Three Pillars of the Maastricht Treaty
• A new agreement to create common foreign and defense policies among members
• A new agreement to cooperate on police, judicial, and public safety matters
• The old familiar European Community, with new provisions to create an economic and monetary union among member states
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10-21
Maastricht Treaty
The most important aspect of the
Maastricht Treaty was the
establishment of the Economic and
Monetary Union.
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10-22
Economic and Monetary Union
• The creation of a single currency called the euro
• European Central Bank - responsible for controlling the Eurozone’s money supply, interest rates, and inflation
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10-23
Components of the Treaty for Europe (Treaty of Amsterdam)
• A strong commitment to attack the EU’s chronic high levels of unemployment
• A plan to strengthen the role of the European Parliament by expanding the number of areas that require use of the co-decision procedure
• Establishment of a two-track system
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10-24
Treaty of Nice
• Sought to reduce the risk of political gridlock as the number of members increases
– reduced number of areas where unanimity is required for Council approval
– adjusted number of votes assigned to each Council member
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10-25
The North American Free Trade Agreement
Implemented in 1994 to reduce
barriers to trade and investment
among Canada, Mexico, and the
United States
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10-26
Major Regional Trade Associations
• AFTA
• ANCOM
• APEC
• CACM
• CARICOM
• CEMAC
• CER
• ECOWAS
• EU
• EFTA
• GCC
• MERCOSUR
• NAFTA
• SADC
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10-27
Map 10.2 Free Trade Agreements in Central and South America
and the Caribbean
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10-29
Map 10.4 Asia-Pacific Economic Cooperation Initiative (APEC)
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10-30
Map 10.5 Free Trade Agreements in Africa
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
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States of America.
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall