Ch.8: Regional Economic Integration Flashcards
Economic integration whereby countries remove all barriers to trade and to the movement of labor and capital among themselves and set a common trade policy against nonmembers
Common Market
Economic integration whereby countries remove all barriers to trade among themselves and set a common trade policy against nonmembers
Customs union
Economic integration whereby countries remove barriers to trade and the movement of labor and capital among members, set a common trade policy against nonmembers, and coordinate their economic policies
Economic Union
European Union plan that established its own central bank and currency
European Monetary Union
Economic integration whereby countries seek to remove all barriers to trade among themselves but where each country determines its own barriers against nonmembers
Free Trade Area
Economic and political integration whereby countries coordinate aspects of their economic and political systems
Political Union
Process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people, or capital
Regional Economic Integration (Regionalism)
Increase in the level of trade between nations that results from regional economic integration
Trade Creation
Diversion of trade away from nations not belonging to a trading bloc and toward member nations
Trade Diversion
A group of nations in a geographic region undergoing economic integration
regional trading bloc
the main difference between a free trade area and a customs union is that
the members of a customs union agree to treat trade with all nonmember nations in a similar manner
A common market integrates the elements of
free trade areas and customs unions and adds the free movement of important factors of production
An economic union goes beyond the demands of a common market by requiring
member nations to harmonize their tax, monetary, and fiscal policies and to create a common currency.
A political union requires member nations to accept
a common stance on economic and political matters regarding nonmember nations.
Trade diversion can occur after the formation of a trading bloc because
of the lower tariffs charged among member nations.
The least amount of sovereignty that must be surrendered to the trading bloc occurs in a
free trade area
By contrast, a political union requires nations to give up a
high degree of sovereignty in foreign policy.
*This is why a Political union is hard to achieve
the European Coal and Steel Community
Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands signed the Treaty of Paris in 1951,
The members of the European Coal and Steel Community signed the Treaty of Rome in 1957, creating the
European Economic Community.
The _____________ fulfills its role of adopting EU law by debating and amending legislation proposed by the European Commission.
European Parliament
European Parliament
-every 5 yrs
-debating and amending legistlation proposed by European Commission
-Exercises political supervision over all EU institutions
European Parliament
-every 5 yrs
-debating and amending legislation proposed by European Commission
-Exercises political supervision over all EU institutions
- also has veto power over some laws
Council of the EU
- the legislative body of the EU
-When it meets, it brings together representatives of member states at the ministerial level.
-No proposed legislation becomes EU law unless the council votes it into law.
-The council also concludes, on behalf of the EU, international agreements with other nations or international organizations
-configuration of the council changes depending on which topic is under discussion (ex: agriculture discussed then council composed of ministers of agriculture
European Commission
-executive body of the EU
-comprised of one commissioner from each member country
-Member nations appoint the president and commissioners after being approved by the European Parliament.
-has the right to draft legislation, is responsible for managing and implementing policy, and monitors member nations’ implementation of, and compliance with, EU law
-commissioners are appointed by their national governments
Court of Justice
-the court of appeals of the EU
-composed of one judge from each member nation and a smaller number of advocates general who hold renewable six-year terms
-One type of case that the Court of Justice hears is one in which a member nation is accused of not meeting its treaty obligations.
-Another type is one in which the commission or council is charged with failing to live up to its responsibilities under the terms of a treaty.
Court of Auditors
-made up of one individual per each member nation appointed for renewable six-year terms.
-The court is assigned the duty of auditing the EU accounts and implementing its budget.
-aims to improve financial management in the EU and to report to member nations’ citizens on the use of public funds
-it issues annual reports and statements on the implementation of the EU budget
European Free Trade Association (EFTA)
-1960, several countries banded together and formed it
-to focus on trade in industrial, not consumer, goods
-today the group consists of only Iceland, Liechtenstein, Norway, and Switzerland
-Despite its relatively small size, members remain committed to free trade principles and raising standards of living for their people
European Economic Area (EEA)
-created by The EFTA and the EU, to cooperate on matters such as the free movement of goods, persons, services, and capital among member nations
-The two groups also cooperate in other areas, including the environment, social policy, and education.
North American Free Trade Agreement (NAFTA)
-As a free trade agreement, NAFTA has eliminated all tariffs and nontariff trade barriers on goods originating within North America
*agreement also calls for liberalized rules regarding government procurement practices, the granting of subsidies, and the imposition of countervailing duties
**NAFTA encourages free trade among Canada, Mexico, and the United States
Four criteria determine whether a good meets NAFTA rules of origin:
-Goods wholly produced or obtained in the NAFTA region
-Goods containing nonoriginating inputs but meeting Annex 401 origin rules (which covers regional input)
-Goods produced in the NAFTA region wholly from originating materials
-Unassembled goods and goods classified in the same harmonized system category as their parts that do not meet Annex 401 rules but that have sufficient North American regional value content
