Globalisation & The EU

What is Globalisation?

The increasing interconnectedness of the world economically, culturally and politically. The current phase developing out of internationalisation.

Globalisation as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole. (Robertson 92)

A social process in which the constraints of geography on economic and cultural arrangements recede, in which people become increasingly aware that they are receding and in which people act accordingly. (Waters)

Wimbledon Tennis Ball

General Economic evidence *Wimbledon tennis ball – product of materials and labour

from at least 10 different countries. Factory in the Philippines, rubber from Malaysia, Tin from Indonesia.

*McDonalds – 31,000 restaurants, in 121 countries, with 46mn customers a day. Annual revenues = $40bn. 1 in 8 Americans has worked in McDonalds, Third of US cows are used for the burgers and 8% of the US potato crops are used for the chips.

*Wal-Mart – Profits in 2002 +$8bn. 3,200 stores in the US and 1,100 abroad. Has bought Germany’s Wertkauf, UK’s ASDA and 34% of Japan’s Seiyu. Will create 800,000 jobs in the US (2003-8) and employs 1.3mn worldwide.

Use the source below to explain how the EU is involved

The emergence of hubs Trade globalisation favours the appearance of

impulse centres where controlling functions, banks and stock exchanges, company head offices, R&D are concentrated.

The best example of this is the TRIAD (the 3 main economic hubs and great political centres: North America, Western Europe, the Far East with Japan.

Note not all spaces belonging to the Triad are dynamic. All the powers belong to only a few big megalopolises (NY, Tokyo, London, Paris, The Rhine-Ruhr). Minor centres make the hierarchy complete ( American sun-belt, Randstad-Holland, Singapore)

How does this source also show the EU’s role in

Globalisation?

Trade Blocs An important feature of world trade has been the

emergence of trading blocs, i.e. countries which choose to trade together as a group e.g. EU, NAFTA, ASEAN.

The advantages are that countries may trade freely without paying duties, or tariffs, on goods produced with the same bloc. To countries outside the bloc there may be tariffs to pay on imported goods.

The EU goes further and permits the free movement of people within the countries & it also has its own currency.

The Global Triad

European Union

28% Global Manufacturing

39% Global exports

NAFTA

29% global manufacturing

18% global exports

APEC

30% Global manufacturing

23% Global exports

$170,140m

$179,710m

$286,240m

$171,090m

$128

,110

m

$148

,110

m

Trade Friction Bananas – EU vs USAEU favours buying bananas from former

colonies rather than from cheapest source. The WTO has upheld USA complaint and sanctions have been placed on EU goods. This means some goods going into the USA from the EU are subject to 100% duties.

Airbus/ BoeingEU vs USA

‘China & the EU can strike a bargain’ Peter Mandelson July 2006

The Common Agricultural Policy In negotiations on the creation of a Common Market, France insisted on a system of

agricultural subsidies as its price for agreeing to free trade in industrial goods.

CAP OBJECTIVES To increase productivity To ensure fair living standards for the agricultural community To stabilise markets To ensure availability of food To provide food at reasonable prices

The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level.

This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of "mountains" and "lakes" of surplus food and drink.

The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world.

Dumping our excess

Impact on Kenya Africa is not too globalised it is too marginalised. *Import duties keep globalisation at bay. Even if

they get rid of the barriers at home, there is still a problem of foreign tariffs.

*The flower industry is only booming, because the EU has removed their tariffs on flowers. If it reverses this decision the farms will perish.

*The EU also subsidies its exports – farmers cannot compete with wheat prices and are thus struggling to survive.

*Half of the EU budget goes on farming. Each EU cow could fly around the world once each year with all their subsidies.