MBA 713 - Chapter 10

Chapter 10 - 1

Chapter 10

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

International Cooperation Among

Nations

Chapter 10 - 2

Learning Objectives

• Learn why the GATT and the WTO are important to international business

• Examine economic integration among cooperating countries

• Analyze business opportunities created by the EU’s internal market

• Describe the other major trading blocs in today’s world economy


Chapter 10 - 3

The General Agreement on Tariffs and Trade and

the World Trade Organization


Chapter 10 - 4

Promote Global Trade


The Goal of GATT

Chapter 10 - 5

GATT Negotiating Rounds


Round Dates Participants Avg. Tariff Cut

Geneva 1947 23 35%Annecy 1949 13 NATorquay 1950 – 1951 38 25%Geneva 1956 26 NADillon 1960 – 1962 45 NAKennedy 1964 – 1967 62 35%Tokyo 1973 – 1979 99 33%Uruguay 1986 – 1994 117 36%

Chapter 10 - 6

The MFN Principle


Overcome Discrimination

in Trade

Applies to All GATT Member

Countries

Chapter 10 - 7

World Trade Organization


Promote International Trade

Reduce Trade Barriers

Resolve Trade Disputes

Chapter 10 - 8

The WTO and GATT


Organization MandateEnforcement

Power

The WTO

The GATT

Broader

Narrower

Greater

Lesser

Chapter 10 - 9

Additional WTO Challenges

• The General Agreement on Trade in Services (GATS)

• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

• Trade-Related Investment Measures Agreement (TRIM)

• Enforcement of WTO Decisions


Chapter 10 - 10

Summary of Discussion


Chapter 10 - 11

Regional Economic Integration


Chapter 10 - 12Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Economic Integration

High

Low Free Trade Area

Customs Union

Common Market

Economic Union

Political Union

Econ

omic

Inte

grat

ion

Chapter 10 - 13

Advantages of Economic Integration


Open Markets of Member Countries

Lower Production and Distribution Costs

Improve International Competitiveness

Chapter 10 - 14

Disadvantages of Economic Integration


Lets Competitors into the Local Market

Harms Specific Sectors in the Economy

Favors Powerful Special Interest Groups

Chapter 10 - 15



Chapter 10 - 16

The European Union


Chapter 10 - 17

Evolution of the EU


•The Treaty of Rome

•The European Community

•The Treaty of Maastricht

Chapter 10 - 18

1. The European Council

2. The Council of the European Union

3. The European Commission

4. The European Parliament

5. The European Court of Justice


Governing the EU

Chapter 10 - 19

The European Council


Political Priorities

Policy Agendas

Chapter 10 - 20

The Council of the EU


Decision Requirements

Qualified Majority

UnanimousApproval

Weighted System

Chapter 10 - 21

• Proposes Legislation

• Implements Treaty Provisions

• Protects the Interests of the EU

• Wields Broad Implementation Powers

• Administers the EU’s Bureaucracy


European Commission

Chapter 10 - 22

European Parliament


Budgetary Powers

Formal Treaties

Sources of Influence

Chapter 10 - 23

•Interprets EU Law•Ensures Compliance


European Court of Justice

Chapter 10 - 24

Legislative Process


The Co-Decision Procedure

The European Parliament

Council of the European

Union

Chapter 10 - 25

The Common Market


•Harmonization

•Mutual Recognition

Chapter 10 - 26

The Single European Act


Access to Markets Prices to Consumers

Regulatory Costs Economies of Scale

Production Costs Foreign Investment

Chapter 10 - 27

From Common Market to European Union


Reassert Europe on

World Stage

Reduce Risks and Costs of

Business

Chapter 10 - 28

The Maastricht Treaty


Foreign and Defense Policies

Police, Judicial, and Public Safety

Economic and Monetary Union

Chapter 10 - 29

Creation of the Euro


Opportunities Challenges

Lower Exchange Rate Risks

Loss of Monetary and Economic Control

Lower Currency Conversion Costs

“One Size Fits All” Monetary Policy

Chapter 10 - 30

Treaties and the Economic Integration

Process


•The Treaty of Amsterdam

•The Treaty of Nice

•The Treaty of Lisbon

Chapter 10 - 31

Future EU Challenges


State Aid toIndustry

CorporateTakeovers

Democracy andAccountability

CommonAgricultural Policy

Chapter 10 - 32



Chapter 10 - 33

Regional Trading Blocs



North American Free Trade Agreement

(NAFTA)•Lower Tariffs•Reduce NTBs•Boost Investments

Chapter 10 - 35

Other Free-Trade Agreements in the

Americas


Central America-Dominican Republic Free

Trade Agreement

The Caribbean Basin Initiative

The Andean CommunityThe Mercosur Accord

Chapter 10 - 36

Trade Arrangements in the Asia-Pacific Region


•Australia-New Zealand Agreement

•Association of Southeastern Asian Nations

•ASEAN Free-Trade Agreement

•Asia-Pacific Economic Cooperation


South African Development Community(SDAC)

Economic and Monetary Community of Central Africa(CEMAC)

Economic Community of West African States(ECOWAS)

African Initiatives

Chapter 10 - 38



Chapter 10 - 39

Chapter 10


International Cooperation Among

Nations


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MBA 713 - Chapter 10

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