SUPRA NATIONAL

ORGANIZATIONS
The European Union

Chapter 10 Lecture 3
 Levels of Economic Integration
• Free Trade Area
• Customs Union
• Common Market
• Economic Union
• Political Union
 Levels of Economic Integration
• Free Trade Area
–Eliminate barriers to goods
produced by member
countries
–Each country has own policies
about trade with outsiders
Levels of Economic Integration
• Customs Union
–Same as Free Trade area
PLUS common policies
about trade with outsiders
Levels of Economic Integration
• Common Market
–Adds free movement of
labor and capital to free
movement of goods and
services
 Levels of Economic Integration
• Economic Union
–Harmonizes all economic
policies
–Common currency
–Some level of political
integration
 Levels of Economic Integration
• Political Union
–Common government for all
members
–Eliminates separate
nationality, etc.
 Development of the EU
• Developed after World War II
– Fear of German resurgence
– Concerns about the Cold War and
future East/West conflicts
• European Coal and Steel Community
– Cooperate to compete
– 1951
 Development of the EU

• Treaty of Rome (1957)—European

Economic Community
– Six countries initially signed
– Goal of economic and political
cooperation
 Development of the EU
• Treaty of Rome (1957)—European
Economic Community
– Gradual movement to remove
barriers to the movement of factors of
production
• People
• Money
• Raw materials
• Finished goods
 Development of the EU
• Customs Union—1968
–Increased trade within
Europe from $6.8 billion in
1958 to $60 billion in 1972
 Development of the EU

• Single European Act—1986

– Pledged to eliminate all trade
barriers by 1992
– End of customs borders within
EU by 1992
– Over 300 provisions to
harmonize laws and regulations
 Development of the EU
• Maastrict Treaty—1991
– Changed name to European Union
– Implemented changes called for in
1986
– Euro by 1999
– Increased power of European Union/
European Parliament
Now 25 nations
 Goal of EU
• Treaty of Rome called for eventual
political union
• Nationalism creates barriers to this
Supra National Organizations
 NAFTA
• Created by treaty among U.S., Mexico
and Canada (1993/1994)
• Reduces or eliminates most barriers
among the three countries
• Still working out problems
• Recent calls to expand throughout the
Americas
 Other Supra National
Organizations
• Military (such as NATO)
• Economic (such as IMF, World Bank,
and regional development banks)
• Trade (other regional trade blocs, OPEC,
etc.)
• Political (like Commonwealth)
 The Burning Question
• Where are we headed?
• Dynamic tension between integration and
separation
– Local
– National
– Regional
– Global