II.REGIONAL ECONOMIC

INTEGRATIONAND

TRADE BARRIERS

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TRADE RESTRICTIONS:COMMON BARRIERS TO TRADE

• TRADE RESTRICTIONS– Common Forms of Barriers

• Tariffs• Subsidies• Quotas• Embargoes

– Nontariff Barriers• Exchange Controls• Foreign Capital Controls

TRADE RESTRICTIONS

• REASONS FOR BARRIERS– Host Government’s View

• Protecting Importing firms• Promoting import substitution• Self sufficiency• Encouraging local and FDI• Promoting export-based growth• Promoting infant industries

PROCESS OF INTEGRATION

• Regulated trade

• Free Trade Association

• Customs Union

• Common market

• Trade Union

• Complete economic integration

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REGIONAL ECONOMIC INTEGRATION

• ECONOMIC INTEGRATION– Purpose

ECONOMIC INTEGRATION

Most Important Examples Today:

European Union (EU)

North American Free Trade Association (NAFTA)

World Trade Organization (WTO)

EUROPEAN UNION

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Political

EU Parliament – Currently 785 MEPs.

Based in France, Belgium and LuxembourgPasses laws, monitors budget, monitors EU institutions

EU CouncilMinisterial representations from each member state

Passes laws, approves EU budget, co-ordination of economic policies, develops foreign policy, co-ordinates anti-crime strategies

EU Commission20 Commissioners appointed by each member state every 5

yearsProposes legislation, Implements EU policies, law enforcement, international co-ordination

Financial

European Central Bank

inflation target of less than 2% per year, sets short term interest rates for the whole eurozone area, Implements and monitors Eurozone monetary policy

European Investment Bank – owned by member states. Raise finance through financial markets, Invest in projects to promote aims of EU –

large scale projects

Court of Auditors

monitors legality and efficiency of EU income and expenditure

Legal

Court of Justice one judge from each member state

Interprets and applies EU legislation

Member States pre-Enlargement

Enlargement - New Members

               

Cyprus

               

Czech Republic

               

Estonia

               

Hungary

               

Latvia

               

Lithuania

               

Malta

               

Poland

               

Slovakia

               

Slovenia

Activities

Agriculture

• CAP – Common Agricultural Policy– Sustainablility– Food Quality– Animal Welfare– Food Safety– Control– Farmers welfare/incomes– Employment in agriculture

Fisheries

• CFP – Common Fisheries Policy– Conservation

of fish stocks– Aid to fishing industry to

cope with changing circumstances

– Monitor supply and demand for fish

– Negotiate with non-EU members on fishing issues

Regions• European Regional Development Fund• European Social Fund• European Agricultural Guidance and Guarantee Fund• Financial Instrument for Fisheries Guidance

– Aims to encourage development of poorer regions– Increase employment opportunities– Encourage new industry to locate in areas

of structural decline– Develop infrastructure in poorer regions– Encourage new training methods and facilities

Finance/Economics

• Euro – monitor introduction and development

• Tax Harmonization – reduce differentials in tax regimes throughout the single market to aid competition and transparency

• Single Market – free movement of goods, services, labor and capital between member states

NAFTA

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NAFTA

Effective as of January 1, 1994

A trade agreement between CANADA, MEXICO, and the UNITED STATES which provides for the elimination of tariffs on North American goods shipped between the three countries.

MEXICO: Lower inflation and foreign debt

create more well-paying jobs for Mexicans

producing less incentive for Mexicans to work illegally in the U.S. become a richer market for American exporters.

Expectations and Goals

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UNITED STATES: solidify an expanding trade relationship

spur job creation at home

help to continue the revolutionary shift throughout Latin America away from state controlled markets toward freer markets.

Expectations and Goals

Mid-Continent

International

Trade Corridor

1. A trade pattern

2. A system of connecting highways and rail routes

3. An opportunity to strengthen economic development in a region

GATT/WTO

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GATT/WTO

GATT - General Agreement on Tariffs and Trade (1946)Facilitated rounds of multilateral trade negotiations:– Trade ministers met regularly for future rounds of multilateral negotiations.

– When the ministers thought the time was right, they

scheduled the next round.

– 8 rounds of negotiation were completed under the GATT,

most recently the Uruguay round (completed 1993, signed in

1994). These brought down tariffs considerably.

– The Uruguay round created the World Trade Organization,

which replaced the GATT

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World Trade Organization

History of the WTO/GATT1. Specified general obligations that all signatories must observe

Countries are permitted to protect own producers from

“unfairly priced” imports:

– Anti-dumping duties

– Countervailing duties (to offset foreign subsidies)

2. A country that believes it has been harmed because

another country has violated GATT rules can request

arbitration and consultation.

– Failing resolution, panel of experts convened to issue a ruling

– This ruling can be unilaterally vetoed

World Trade Organization

TRIPS Agreement attempts

to narrow the gaps in the way intellectual property rights are protected around the world

to bring them under common international rules.

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