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
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Chapter 10 - 3
The General Agreement on Tariffs and Trade and
the World Trade Organization
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Chapter 10 - 4
Promote Global Trade
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The Goal of GATT
Chapter 10 - 5
GATT Negotiating Rounds
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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
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Overcome Discrimination
in Trade
Applies to All GATT Member
Countries
Chapter 10 - 7
World Trade Organization
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Promote International Trade
Reduce Trade Barriers
Resolve Trade Disputes
Chapter 10 - 8
The WTO and GATT
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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
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Chapter 10 - 10
Summary of Discussion
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Chapter 10 - 11
Regional Economic Integration
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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
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Open Markets of Member Countries
Lower Production and Distribution Costs
Improve International Competitiveness
Chapter 10 - 14
Disadvantages of Economic Integration
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Lets Competitors into the Local Market
Harms Specific Sectors in the Economy
Favors Powerful Special Interest Groups
Chapter 10 - 15
Summary of Discussion
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Chapter 10 - 16
The European Union
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Chapter 10 - 17
Evolution of the EU
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•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
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Governing the EU
Chapter 10 - 19
The European Council
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Political Priorities
Policy Agendas
Chapter 10 - 20
The Council of the EU
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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
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European Commission
Chapter 10 - 22
European Parliament
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Budgetary Powers
Formal Treaties
Sources of Influence
Chapter 10 - 23
•Interprets EU Law•Ensures Compliance
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European Court of Justice
Chapter 10 - 24
Legislative Process
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The Co-Decision Procedure
The European Parliament
Council of the European
Union
Chapter 10 - 25
The Common Market
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•Harmonization
•Mutual Recognition
Chapter 10 - 26
The Single European Act
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Access to Markets Prices to Consumers
Regulatory Costs Economies of Scale
Production Costs Foreign Investment
Chapter 10 - 27
From Common Market to European Union
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Reassert Europe on
World Stage
Reduce Risks and Costs of
Business
Chapter 10 - 28
The Maastricht Treaty
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Foreign and Defense Policies
Police, Judicial, and Public Safety
Economic and Monetary Union
Chapter 10 - 29
Creation of the Euro
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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
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•The Treaty of Amsterdam
•The Treaty of Nice
•The Treaty of Lisbon
Chapter 10 - 31
Future EU Challenges
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State Aid toIndustry
CorporateTakeovers
Democracy andAccountability
CommonAgricultural Policy
Chapter 10 - 32
Summary of Discussion
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Chapter 10 - 33
Regional Trading Blocs
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Chapter 10 - 34Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
North American Free Trade Agreement
(NAFTA)•Lower Tariffs•Reduce NTBs•Boost Investments
Chapter 10 - 35
Other Free-Trade Agreements in the
Americas
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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
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•Australia-New Zealand Agreement
•Association of Southeastern Asian Nations
•ASEAN Free-Trade Agreement
•Asia-Pacific Economic Cooperation
Chapter 10 - 37Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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
Summary of Discussion
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Chapter 10 - 39
Chapter 10
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
International Cooperation Among
Nations
Chapter 10 - 40Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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