Define
Define Regional Economic Integration
Agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other
Trade ___________ occurs when low cost producers within the free trade area replace high cost domestic producers.
Creation
Why was NAFTA (1994) established?
To remove trade barriers and allow for cross-border flows of services, as well as application of national environmental standards between the US, Mexico, and Canada.
Name 1 of the 2 main impediments to regional economic integration.
1. It can be costly - while a nation as a whole may benefit from a regional free trade agreement, certain groups may lose
2.I t can result in a loss of national sovereignty
The _________ _________ emerged as the result of the devastation of two world wars on Western Europe and the desire for a lasting peace.
European Union
The first level of Economic Integration is described as the Free Trade Area.
Define Free Trade Area:
All barriers to the trade of goods and services among member countries are removed, but members determine their own trade policies with regard to nonmembers.
Ex: European Trade Association, NAFTA
The _________ ________ eliminates trade barriers between member countries and adopts a common external trade policy.
Customs Union
What was the purpose of the Single European Act (1987)?
Committed EC countries to work toward establishment of a single market by 1992
Name 1 of the two trade block institutions that Europe has in place.
2. The European Free Trade Association (4 members)
NAFTA was beneficial for __________ because it increased jobs as low cost production moved toward it, resulting in more rapid economic growth.
Mexico
Define Common Market:
Third Level of economic integration. No barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production
A(n) ___________ _________ involves the free flow of products and factors of production between members, the adoption of a common external trade policy, and a common currency.
Economic Union
What was Mercosur (1988)?
Free Trade pact between Brazil and Argentina
DOUBLE JEOPARDY (Correct answer =600pts)
List 2 of the four main institutions of the EU:
1. The European Commission: proposes EU legislation, implements it, and monitors compliance
2. The European Council: the ultimate controlling authority within the EU
3. The European Parliament: debates legislation proposed by the commission and forwarded to it by the council
4. The Court of Justice: the supreme appeals court for EU law
A customs union between English-speaking Caribbean countries.
Define Optimal Currency Area:
An area where similarities in the underlying structure of economic activities make it feasible to adopt a single currency and use a single exchange rate
Trade ___________ occurs when higher cost suppliers within the free trade area replace lower cost external suppliers.
Diversion
What was the purpose of the Maastricht Treat (1992)?
Committed EU members to adopt a single currency, the euro
List 2 of the four main benefits of the use of the Euro in the EU:
•Handling one currency, rather than many
•Easier to compare prices across Europe
•Increased competition promotes greater efficiencies in production
•The pan-European capital market should further develop
Name 3 of the countries that are part of the Central American Common Market:
Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic
Define Asian Pacific Economic Cooperation (APEC):
Was founded in (1990) to increase multilateral cooperation in view of the economic rise of the Pacific nations and the growing interdependence within the region.
The ___________ Community (1969) was based on the EU model, but more or less failed by the late 1980s.
Andean
What was the purpose of the establishment of the Association of Southeast Asian Nations (ASEAN) (1967)?
Give 3 of the countries involved.
Foster freer trade between member countries and cooperation in their industrial policies
Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Myanmar, Laos, and Cambodia
List 2 of the four main drawbacks of NAFTA:
•Jobs could be lost and wage levels could decline in the U.S. and Canada
•Mexican workers could emigrate north
•Pollution could increase due to Mexico's more lax standards
•Mexico would lose its sovereignty
Since its establishment, the euro has has a volatile trading history with the ____ ________.
US dollar