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Chapter3TheGlobalTradeEnvironment:RegionalMarketCharacteristicsandPreferentialTradeAgreementsPowerPointbyKristopherBlanchardNorthCentralUniversit

y©2005PrenticeHall2023/7/183-1GATTGeneralAgreementonTariffsandTrade–treatyamongnationstopromotetradeamon

gmembers•Handledtradedisputes•Lackedenforcementpower•ReplacedbyWorldTradeOrganizationin1995©2005PrenticeHall2TheWorl

dTradeOrganizationProvidesforumfortrade-relatednegotiationsamong141members–basedinGeneva–servesasdisputemediators–empoweredwitha

bilitytoenforcerulingsCountriesfoundinviolationofWTOrulesareexpectedtochangepoliciesorelsefacesanctions©2005PrenticeHall3RecentWTOC

ases©2005PrenticeHall4PreferentialTradeAgreementsManycountriesseektolowerbarrierstotradewithintheirregions–FreeTradeAreas–CustomsUnions–Com

monMarket–EconomicUnions©2005PrenticeHall5NorthAmericaCanada,UnitedStates,MexicoNAFTAestablishedfreetradearea–allthree

nationspledgetopromoteeconomicgrowththroughtariffreductionsandexpandedtradeandinvestment–nocommonexternaltariffs–restrict

ionsonlaborandothermovementsremain©2005PrenticeHall6NAFTAIncomeandPopulation©2005PrenticeHall7LatinAmericaCa

ribbean,Central,andSouthAmerica4preferentialtradeagreementsinplace–CentralAmericanIntegrationSystem–AndeanCommunity–

CommonMarketoftheSouth–CaribbeanCommunityandCommonMarket©2005PrenticeHall8AndeanCommunityBolivia,Colombia,Ecuador,Peru,Ven

ezuelaCustomsunion–Agreementabolishedforeignexchange,financialandfiscalincentives,andexportsubsidies–Commonexternaltariffswereesta

blished©2005PrenticeHall9CommonMarketoftheSouth(Mercosur)Argentina,Brazil,Paraguay,UruguayCustomsunion

,seekstobecomecommonmarket–internaltariffseliminated–commonexternaltariffsupto20%established–intime,factorsofproductionwillmovefreelyth

roughmembercountriesChileandBolivia-–associatemembers–participationinfreetradeareabutnotcustomsunion©2005

PrenticeHall10CaribbeanCommunityandCommonMarket(CARICOM)Antigua,Barbuda,Bahamas,Barbados,Belize,Dominica,Grenada,G

uyana,Haiti,Jamaica,Montserrat,St.Kitts,St.Lucia,St.Vincent,theGrenadines,Trinidad,TobagoReplacedCaribbeanFreeTradeAssociationAgr

eedtoestablisheconomicunionwithcommoncurrencyin1998©2005PrenticeHall11Asia-PacificIncludes23countriesand56%

ofworldpopulation–Japan–Newlyindustrializingeconomies–AssociationofSoutheastAsianNations©2005PrenticeHall12JapanGenerates14%ofworld’sGNPKeyfacto

rs–populationdensity–geographicisolationRecenteconomicstrugglesdespitestatusashighincomecountryStrong

culturerequiresflexibilityandcommitmentfromglobalmarketers©2005PrenticeHall13NewlyIndustrializingEconomies

(NIEs)Strongeconomicgrowthinrecentdecades–foreigninvestment–export-drivenindustrialdevelopmentSometimescalledth

e4TigersofAsia–SouthKorea–Taiwan–Singapore–HongKong©2005PrenticeHall14AssociationofSoutheastAsianNations(ASEAN)Brunei,Indonesia,Malaysia,Ph

ilippines,Singapore,Thailand,Vietnam,Cambodia,Laos,BurmaGoaltoimplementafreetradeareaby2003–Tariffsof20+%willbereducedto0-5%Sing

aporerepresentsgreatsuccessamongASEANnations©2005PrenticeHall15EuropeEuropeanUnionEuropeanFreeTradeArea

EuropeanEconomicAreaTheLomeConventionCentralEuropeanFreeTradeAssociation(CEFTA)©2005PrenticeHall16EuropeanUnionInitiall

ybeganwiththe1958TreatyofRomeObjectivetoharmonizenationallawsandregulationssothatgoods,services,peopleandmoneycouldflowfreelyacrossnationalbound

aries1991MaastrichtTreatysetstagefortransitiontoaneconomicunionwithacentralbankandsinglecurrency(theEuro)©200

5PrenticeHall17EuropeanFreeTradeAreaandtheEuropeanEconomicAreaAustria,Finland,Sweden,Norway,Iceland,Liechtenstein,SwitzerlandFreetradearea

Members(excludingSwitzerland)chosetoestablishEuropeanEconomicArea(EEA)–Non-EUmembersoftheEEAareexpectedtoadoptEUguidelinesNorway,Iceland,Liechtenstei

n,andSwitzerlandmaintainfreetradeagreementswithothercountriesaswell©2005PrenticeHall18TheLomeConventionAnacc

ordbetweenEUand71countriesinAfrica,Caribbean,andthePacificPromotestradeandprovidespoorcountrieswithfinanciala

ssistancefromaEuropeanDevelopmentFundCurrentlyworkingtoestablishasuccessoragreement©2005PrenticeHall19CentralEuropeanFreeTradeAssociatio

n(CEFTA)Hungary,Poland,CzechoslovakiaAllowsforcooperationinmanyareasincluding:–infrastructureandtele

communications–sub-regionalprojects–inter-enterprisecooperation–tourismandretailtrade©2005PrenticeHal

l20TheMiddleEastAfghanistan,Cyprus,Bahrain,Egypt,Iran,Iraq,Israel,Jordan,Kuwait,Lebanon,Oman,Qatar,SaudiArabia,Sy

ria,theUnitedArabEmirates,Yemen–PrimarilyArab,somePersianandJews–95%Muslim3keyregionalorganizations–GulfCooperationCouncil–ArabMaghrebUnion–

ArabCooperationCouncil©2005PrenticeHall21Africa53nationsoverthreedistinctareas–RepublicofSouthAfrica–NorthAfrica–BlackAfricaRegionalag

reements–EconomicCommunityofWestAfricanStates–EastAfricanCooperation–SouthAfricanDevelopmentCommunity©2005PrenticeHall22EconomicCommunityofWestA

fricanStates(ECOWAS)Benin,BurkinaFaso,CapeVerde,TheGambia,Ghana,Guinea,Guinea-Bissau,IvoryCoast,Liberia,Mali,Mauritania,Niger,Nigeria,Seneg

al,SierraLeone,TogoFreetradeareawithunifiedmonetaryzone©2005PrenticeHall23EastAfricanCooperationKenya,Ugan

da,TanzaniaFreetradeareawithpossibilityofexpansiontoacustomsunion©2005PrenticeHall24SouthAfricanDevelopmentCommunity(SADC)Angola,Botswa

na,Congo,Lesotho,Malawi,Mauritius,Mozambique,Namibia,SouthAfrica,Seychelles,Swaziland,Tanzania,Zambia,ZimbabweMechanismt

opromotetrade,cooperation,andeconomicintegrationbyblack-ruledstatesUltimatelyseekstoformcustomsunion©2005Prent

iceHall25LookingAheadtoChapter4SocialandCulturalEnvironments©2005PrenticeHall26FreeTradeAreasTwoormorecountriesagreetoabol

ishallinternalbarrierstotradeamongstthemselvesCountriescontinueindependenttradepolicieswithcountriesoutsideagreemen

t©2005PrenticeHall27FreeTradeAreasReturn©2005PrenticeHall28CustomsUnionsEvolutionofFreeTradeAreaIncludestheeliminationofinternalbarrierstot

rade(asinFTA)ANDEstablishescommonexternalbarrierstotradeReturn©2005PrenticeHall29CommonMarketIncludestheeliminationofinternalbarrierstotrade(asinfr

eetradearea)ANDEstablishescommonexternalbarrierstotrade(asincustomsunion)ANDAllowsforthefreemovementoffactorsofproduct

ion,suchaslabor,capital,andinformationReturn©2005PrenticeHall30EconomicUnionsIncludestheeliminationofinternalbarriers

totrade(asinfreetradearea)ANDEstablishescommonexternalbarrierstotrade(asincustomsunion)ANDAllowsforthefreemovementoffac

torsofproduction,suchaslabor,capital,andinformation(asincommonmarket)ANDCoordinatesandharmonizeseconomicandsoci

alpolicywithintheunion©2005PrenticeHall31EconomicUnionsFullevolutionofeconomicunion–creationofunifiedcentralbank–useofsinglecurre

ncy–commonpoliciesonissuesrangingfromagriculturetotaxation–requiresextensivepoliticalunityReturn©2005Pren

ticeHall32