From 1948 to 1994 108

regional trade cooperation

agreements were made, Total
agreements conveyed to
WTO were 175 among these
107 were in force as of mid
1999.
GATT
WTO
EU
NAFTA
 Free Trade Area
All barriers to trade among
members removed.
Each country can determine own
trade policies toward nonmembers.
 MERCOSUR
(Argentina,Brazil,Paraguay &
Uruguay)
Economic
Allow countries to
specialize in products they
produce efficiently.
Easier to gain agreement
than GATT/WTO.
 Role of FDI is Political
Creates
enhanced. incentive for
political
Exploit gains cooperation.
from free Reduces
potential for
flow of goods violent
and services confrontation.
Enhanced clout
and to deal with
investment superpowers.
 Although a nation may
benefit, groups within
a nation may be hurt.
Concerns about
national sovereignty.
Debate:
Trade creation.
Trade diversion.
 1951 - European Coal and Steel
Community.
1957- Treaty of Rome establishes
the European Community.
1994 - Treaty of Maastricht
changes name to the European
Union.
 European Council European Commission
implementing,
monitoring
Resolves policy 27 Commissioners
Heads of State legislation.
issues sets appointed by
and members for
policy direction.
Commission 4 year terms
President
Council of Ministers
1
Ultimate controlling authority. No
representative
European Parliament from each
EU laws w/o approval.
member Court of Justice
754 directly Propose amendments to
elected members legislation, veto power Hears
over budget and single- 1 judge from
appeals of
market legislation, each country
EU Laws.
appoint commissioners.
1987- EC agrees to work toward
establishing a single market by
December 31, 1992.
Fortress Europe?
Create European barriers to
trade from the outside?
EU promises to support
GATT and the WTO.
No guarantees, however.
 Jan. 1, 1994

Abolish Remove FDI

tariffs restrictions
Protect
intellectual
property Apply
national
environmental
standards
 Enlarged and productive regional base.
Labor-intensive industries move to
Mexico.
Mexico gets investment and
employment.
Increased Mexican income to buy
US/Canada goods.
Demand for goods increases
Consumers get lower prices.
 Mexican firms have to compete
against efficient US/Canada
firms.
Environmental degradation.