Ch.8: Regional Economic Integration

Question 1

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

Answer 1

Common Market

Question 2

Economic integration whereby countries remove all barriers to trade among themselves and set a common trade policy against nonmembers

Answer 2

Customs union

Question 3

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

Answer 3

Economic Union

Question 4

European Union plan that established its own central bank and currency

Answer 4

European Monetary Union

Question 5

Economic integration whereby countries seek to remove all barriers to trade among themselves but where each country determines its own barriers against nonmembers

Answer 5

Free Trade Area

Question 6

Economic and political integration whereby countries coordinate aspects of their economic and political systems

Answer 6

Political Union

Question 7

Process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people, or capital

Answer 7

Regional Economic Integration (Regionalism)

Question 8

Increase in the level of trade between nations that results from regional economic integration

Answer 8

Trade Creation

Question 9

Diversion of trade away from nations not belonging to a trading bloc and toward member nations

Answer 9

Trade Diversion

Question 10

A group of nations in a geographic region undergoing economic integration

Answer 10

regional trading bloc

Question 11

the main difference between a free trade area and a customs union is that

Answer 11

the members of a customs union agree to treat trade with all nonmember nations in a similar manner

Question 12

A common market integrates the elements of

Answer 12

free trade areas and customs unions and adds the free movement of important factors of production

Question 13

An economic union goes beyond the demands of a common market by requiring

Answer 13

member nations to harmonize their tax, monetary, and fiscal policies and to create a common currency.

Question 14

A political union requires member nations to accept

Answer 14

a common stance on economic and political matters regarding nonmember nations.

Question 15

Trade diversion can occur after the formation of a trading bloc because

Answer 15

of the lower tariffs charged among member nations.

Question 16

The least amount of sovereignty that must be surrendered to the trading bloc occurs in a

Answer 16

free trade area

Question 17

By contrast, a political union requires nations to give up a

Answer 17

high degree of sovereignty in foreign policy.

*This is why a Political union is hard to achieve

Question 18

the European Coal and Steel Community

Answer 18

Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands signed the Treaty of Paris in 1951,

Question 19

The members of the European Coal and Steel Community signed the Treaty of Rome in 1957, creating the

Answer 19

European Economic Community.

Question 20

The _____________ fulfills its role of adopting EU law by debating and amending legislation proposed by the European Commission.

Answer 20

European Parliament

Question 21

European Parliament

Answer 21

-every 5 yrs

-debating and amending legistlation proposed by European Commission

-Exercises political supervision over all EU institutions

Question 22

European Parliament

Answer 22

-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

Question 23

Council of the EU

Answer 23

• 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

Question 24

European Commission

Answer 24

-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

Question 25

Court of Justice

Answer 25

-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.

Question 26

Court of Auditors

Answer 26

-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

Question 27

European Free Trade Association (EFTA)

Answer 27

-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

Question 28

European Economic Area (EEA)

Answer 28

-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.

Question 29

North American Free Trade Agreement (NAFTA)

Answer 29

-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

Question 30

Four criteria determine whether a good meets NAFTA rules of origin:

Answer 30

-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