c hapter 10
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c hapter 10. international cooperation among nations. Chapter Objectives. Explain the importance of the GATT and the WTO to international business Contrast the different forms of economic integration among cooperating countries - PowerPoint PPT PresentationTRANSCRIPT
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intern
ation
al bu
siness, 5
th edition
chapter 10international cooperationamong nations
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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
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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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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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Table 10.1 GATT Negotiating Rounds
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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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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)
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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
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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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Figure 10.1 The WTO’s Principles of the
Trading System
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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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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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Rice producers would likely benefit if trade barriers
were eliminated in this market.
The world market for rice is distorted by high tariffs, ranging from 20-43 percent.
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Forms of Economic Integration
Free Trade Area
Common Market
Economic Union
Customs Union
Political Union
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Figure 10.2 Forms of Economic Integration
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European Union (EU)
• Most important regional trading bloc
• 25 member countries
• 455.3 million population
• Combined GDP of $12.7 trillion
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Map 10.1 The European Union
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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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The first meeting of the European Commission after the enlargement of the
EU to 25 members.
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Figure 10.3 The Co-Decision Procedure
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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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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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Treaty of Nice
• Sought to reduce the risk of political gridlock as the number of members increase
– reduced number of areas where unanimity is required for Council approval
– adjusted number of votes assigned to each Council member
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Major Regional Trade Associations
• AFTA
• ANCOM
• APEC
• CACM
• CARICOM
• CEMAC
• CER
• ECOWAS
• EU
• EFTA
• GCC
• MERCOSUR
• NAFTA
• SADC
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Map 10.2 Free Trade Agreements in Central and South America
and the Caribbean
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Map 10.3 The ASEAN Members
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Map 10.4 Asia-Pacific Economic Cooperation Initiative (APEC)
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Map 10.5 Free Trade Agreements in Africa