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Flashcards in Regional Economical Integration / WTO Deck (11)
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1

What is Regional Economic Integration?

Agreements among nations to reduce tariff and non tariff barriers to free flow of
-goods
-services
-production factors

2

Production factors

-land
-labour
-capital

3

Reasons for/against regional integration (name one of each)

- economic enhancment
-political reasons
--> grouping gives more political clout world wide
Impediments:
- painful adjustments in certain segments of economy

4

Levels of Integration (sorted by uprising complexitiy and level of integration)

Free Trade (NAFTA, USMCA):
- removes trade barriers
Custom Union:
-common trade policies among nations
Common market (some EU nations)
-factors of production can move freely between countries
economic union (some eu countries)
-full integration of member economies (currency etc.)
political union (United Arab emirates)
-coordinated economical, social and foreign policy

5

Why is change of level of integration very complex (for example custom union to common market)

-labour loss
-new visa classes
-credit reporting
-financial reporting
--> the higher the level of integration the more complex the process

6

NAFTA: Why Trade deal with Canada and Mexico?

- more dynamism
-lower production cost and wages
-better competitevness with asian countries
-increasment of trade
-increasment of Investmens and FDIs
- creating local value because of keeping supply chain in north america

7

Disadvantages/fears of NAFTA

- job loss in US
--> NOT true, every 100 jobs lost to mexico, 250 were created in US
- shifting bargaining power to multinational companies
- economic growth in foreign country

8

What is Unique about NAFTA compared to WTO?

Investor-State disputes:
Under Nafta investors (companies) can file a dispute directls in the NAFTA tribunal against a government; under WTO the company has to convince its own government to file a dispute against the other government

9

What was before the WTO (World trade organization)?

General Agreement on Tariffs and Trade: 1947-199
-worked fine in the beginning because only a few members
- as it became more members, cliques builded and the anonymous negotiations could not take place anymore
- no accountability anymore
- GATT mostly covered trade in goods only

10

WTO

- structure security and predictability improved
- its a nation to nation agreement so government has to go to other government with dispute
- works like a court
- power is limited to impose retaliation

11

How Trade policies are established in US

- Trade is a congress issue
- congress has the authority to regulate interstate policy
- President has FAST TRACK authorization:
- he is representative of the congress in trade negotiations
-congress only can apporove or disapprove