© 2005 West Legal Studies in Business/Thomson Learning1

European Union and other Regional Trade Areas

European Union and other Regional Trade Areas

Chapter 14

2

The Philosophy of Economic Integration

The Philosophy of Economic Integration

• Political union Economic union

• Economic union Political union

3

ModelsModels

• Federal

• Free trade area

• Customs Union

• Common Market

• Conflict with GATT?

4

European UnionEuropean Union

• Treaty of Rome (1957) creates European Community

• Single European Act (1987) set 1992 deadline of achieving single market

• Maastricht Treaty (1993) created European Union and set path for monetary union

5

European UnionEuropean Union

• Treaty of Amsterdam: 1999 (incorporated the principle of freedom of movement from the Schengen Agreement)

• Treaty of Nice: 2000, voting rights for new members; 10 members to join May 2004, (Poland, Lithuania, Estonia, Latvia, Hungary, Czech republic, Slovenia, Slovakia, Malta and Cyprus). Population of 440 million eclipsing NAFTA

6

European UnionEuropean Union

• Constitution for Europe? What are the issues? What is its status?

7

Monetary Union CriteriaMonetary Union Criteria

• Budget deficit no greater than 3% of GDP

• Public debt no greater than 60% GDP

• Price stability (inflation controlled)

• Long term interest rates within 2% of the best 3 countries

• Exchange rate stability

8

TimetableTimetable

• January 1, 1999- Euro single currency is born

• 1999-2002 National currencies continue to exist and work in parallel

• 2002- switched to single currency

• Not all countries have joined? Why?

9

EU MembersEU Members

• Belgium, Germany, France, Luxembourg, Netherlands, Italy

• (1973) Denmark, Ireland, United Kingdom

• (1981) Greece

• (1986) Portugal, Spain

• (1995) Austria, Finland

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EU OrganizationEU Organization

• Council

• Commission

• Parliament

• Court of Justice

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Law-Making Within the EULaw-Making Within the EU

• Regulations vs. directives

• Role of Council, Commission and Parliament

• Court of Justice review

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Privacy in the EU: A Different Approach from the U.S.

Privacy in the EU: A Different Approach from the U.S.

• What is the philosophical difference?

• How is it reflected in the law?

13

Common Agricultural Policy (CAP)Common Agricultural Policy (CAP)

• What is it?• What conflicts have occurred?• How are the goals described now?

“transparency, quality and safety and a farm sector in tune with the environment and animal welfare.. A sustainable farm and food sector for the future”

• How does the expansion of the EU affect this?

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National Farmer’s Union (France)National Farmer’s Union (France)

• The Commission adopted emergency measures to protect against BSE ( Bovine spongiform encephalopathy) or mad cow disease. The UK was temporarily prohibited from exporting beef to the Continent.

• The Court found that since there was a procedure in place to protect the public upon the resumption of exports, France

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National Farmer’s Union (France)National Farmer’s Union (France)

• Could not invoke Article 30 to block imports.

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Business Implications of the EUBusiness Implications of the EU

• What are the ramification for business of the expansion of the EU?

• What impact does the trade friction between the U.S. and the EU have on business ventures?

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Cotonou AgreementCotonou Agreement

• 2000

• EU, African, Caribbean and Pacific countries

• EU had GSP program since 1971 and in effect until 2007

• 2007 new “partnerships” will begin

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Other Economically Integrated Trade Areas

Other Economically Integrated Trade Areas

• Mercosur: Argentina, Brazil, Paraguay, Uruguay

• Andean Common Market: Bolivia, Venezuela, Colombia, Ecuador, Peru

• ASEAN: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Myanmar, Laos, Cambodia, Vietnam

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• African trade areas( AEC, COMESA, SADC)

• Caricom

• Arab League

• Gulf Cooperation Council

• NAFTA

• FTA ( Free Trade in the Americas)

Trade AreasTrade Areas

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Trade AreasTrade Areas

• APEC

• Others?

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How are these groups different from the EU and the US?

• Scope of agreement

• Court

• Currency

• Army

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Free Trade and Protectionism Debate

Free Trade and Protectionism Debate

• Winners and losers?

• Compatibility with GATT and WTO?

• Role of trade areas

23

Current IssuesCurrent Issues

• EU: adherence to the criteria for monetary union, price of unification, expansion, “wider and deeper,” CAP, labor, two tiered Europe?, subsidiarity (let the decision be made at the lowest level possible- a hedge against over-reaching by the EU), foreign policy

• expansion of NAFTA- connection to US politics and national elections?