Among the most outstanding features of the current processes of regional economic integration are: 1. It now has twenty-one member economies on both sides of the Pacific Ocean. Some trading blocs have resulted in agreements that have been more substantive than others in creating economic cooperation. Originally, the agreement (then called the Central America Free Trade Agreement, or CAFTA) encompassed discussions between the US and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. 22. Nadim Kawach, “Unrest Will Not Affect GCC Monetary Union: Bahrain Central Bank Governor Says Union Remains Open for Other Members,” Emirates 24/7, March 12, 2011, accessed April 30, 2011, http://www.emirates247.com/2.266/finance/unrest-will-not-affect-gcc-monetary-union-2011-03-12-1.366972. “What Is CAFTA?,” CAFTA Intelligence Center, accessed April 30, 2011. The goal of the agreement is the creation of a free trade area similar to NAFTA. 23. In the 1980s, Mexico had tariffs as high as 100 percent on select goods. Forced to compete with large multinationals and Mexican conglomerates, many traditional family-owned firms have had to close because they were unable to compete in the global marketplace. Of course, there are pros and cons for creating regional agreements. Mexican maquiladoras have fared well in this arrangement by being the final production stop before entering the United States or Canada. Although less emphasized today, one of the primary early missions of ASEAN was to prevent the domination of Southeast Asia by external powers—specifically China, Japan, India, and the United States. It also hopes to create an ASEAN Economic Community by 2015.“ASEAN Countries to Integrate Regional Capital Markets by 2015,” Asia Economic Institute, accessed April 30, 2011, http://www.asiaecon.org/special_articles/read_sp/12174. Regional Integration 2. Beijing is hoping closer economic ties will draw Taiwan further into its orbit.”Isaac Stone Fish, “Taiwan Inks Risky Deal with China,” Newsweek, July 2, 2010, accessed December 31, 2010, http://www.newsweek.com/2010/07/02/taiwan-inks-a-risky-deal-with-china.html. Regional integration is a process in which countries enter into a regional agreement in order to enhance regional cooperation through regional … It’s often called a “spaghetti bowl” of global bilateral and multilateral trade agreements, because the agreements are not linear strands lining up neatly; instead they are a messy mix of crisscrossing strands, like a bowl of spaghetti, that link countries and trading blocs in self-benefiting trading alliances. Companies that choose to manufacture in one country find it easier and cheaper to move goods between member countries in that trading bloc without incurring tariffs or additional regulations. [In October 2008,] plans were agreed to create a “super” free trade zone encompassing 26 African countries, stretching from Libya in the north to South Africa. First, the EU doesn’t consist of the same countries as the continent of Europe. Over the first decade of the agreement, almost all tariffs between Mexico, Canada, and the United States were phased out. 14. The European single market is the foremost advantage of being a member of EU. Free trade area. 21. Customs union. 28. As you learned in the opening case study, the EU originally began in 1950 to end the frequent wars between neighboring countries in the Europe. (Belgium, Luxembourg, and the Netherlands), all of which signed a treaty to run their coal and steel industries under a common management. There are four main types of economic integration: (AACSB: Reflective Thinking, Analytical Skills). After reading this section, students should be able to …. The European Economic Area (EEA) was established on January 1, 1994, following an agreement between the member states of the European Free Trade Association (EFTA) and the EC (later the EU). The focus was on the development of the coal and steel industries for peaceful purposes. Since then, Canada, Mexico, and the United States have each negotiated bilateral trade agreements with Chile, but there is still occasional mention that Chile may one day join NAFTA.Anthony DePalma, “Passing the Torch on a Chile Trade Deal,” New York Times, January 7, 2001, accessed April 30, 2011, http://www.nytimes.com/2001/01/07/business/economic-view-passing-the-torch-on-a-chile-trade-deal.html. “About CEFTA,” Central European Free Trade Agreement, accessed April 30, 2011, http://cefta.net; Andzej Arendarski, Ludovit Cernak, Vladimir Dlouhy, and Bela Kadar, “Central European Free Trade Agreement,” December 21, 1992, accessed April 30, 2011, http://www.worldtradelaw.net/fta/agreements/cefta.pdf; Wikipedia, s.v. Anthony DePalma, “Passing the Torch on a Chile Trade Deal,” New York Times, January 7, 2001, accessed April 30, 2011. “Stop Meddling in Our Affairs: GCC Countries Tell Iran,” The Middle East Times, April 4, 2011, accessed April 30, 2011, http://www.mideast-times.com/left_news.php?newsid=1628. Since the mid-1960s, production facilities known as maquiladoras have been a regular feature of Mexican border towns, especially along the Texas and New Mexico borders. Forced to compete with large multinationals and Mexican conglomerates, many traditional family-owned firms have had to close because they were unable to compete in the global marketplace. Mexico has fared the best from NAFTA as trade has increased dramatically. Despite the challenges, the EU is likely to endure given its historic legacy. Meaning of Economic Integration: A process whereby countries cooperate with one another to reduce or eliminate barriers to the international flow of products, people or capital; Takes place either on region or commodity; Levels Of Regional Economic Integration: Five levels of regional integrations: 1. Joanna Klonsky and Stephanie Hanson, “Mercosur: South America’s Fractious Trade Bloc,” Council on Foreign Relations, August 20, 2009, accessed April 30, 2011. “About CEFTA,” Central European Free Trade Agreement, accessed April 30, 2011, http://cefta.net. Early efforts to study regional integration, as mentioned, mainly concentrated on the European Coal and Steel Community (ECSC) and the European Economic Community (EEC). With this treaty, the EU identified three aims. It’s likely that any resulting agreements will have to reconcile differences in rules and regulations with NAFTA as well as any other existing agreements.15. Along with the benefits, challenges have also come with the increased trade. When two businesses are brought together through a merger or takeover, it is possible to define the nature and type of integration based on the activities of each business and where they operate in the supply chain of an industry. This is the case, particularly, for relatively low-skilled labor. “About the US–ASEAN Business Council,” US–ASEAN Business Council, accessed December 31, 2010, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fast_facts-faits_saillants.aspx?lang=eng, http://books.google.com/books?id=z2tEhXnm1rAC&pg=PA88&lpg=PA88&dq=will+chile+join+nafta+2009 &source=bl&ots=iohSe7YV0E&sig=BjQr2KOx0lsrAGhv5vMqeb9LhFU&hl=en&ei=hLu8 TZ3LPNDAgQeZusjqBQ&sa=X&oi=book_result&ct=result&resnum=6&ved=0CDoQ6A EwBQ#v=onepage&q=will%20chile%20join%20nafta%202009&f=false, http://www.nytimes.com/1994/12/12/world/chile-is-admitted-as-north-american-free-trade-partner.html, http://www.nytimes.com/2001/01/07/business/economic-view-passing-the-torch-on-a-chile-trade-deal.html, http://www.cfr.org/trade/mercosur-south-americas-fractious-trade-bloc/p12762, http://www.grouplamerica.com/andean_pact.htm, http://www.eeas.europa.eu/andean/rsp/07_13_en.pdf, http://www.export.gov/FTA/cafta-dr/index.asp, http://www.caftaintelligencecenter.com/subpages/What_is_CAFTA.asp, http://www.caftaintelligencecenter.com/subpages/location-International.asp, http://europa.eu/abc/history/index_en.htm, http://europa.eu/about-eu/member-countries/index_en.htm, http://www.worldtradelaw.net/fta/agreements/cefta.pdf, http://visegradgroup.eu/main.php?folderID=858, http://en.wikipedia.org/wiki/Central_European_Free_Trade_Agreement, http://europa.eu/about-eu/institutions-bodies/index_en.htm, http://europa.eu/about-eu/basic-information/index_en.htm, http://www.nytimes.com/2010/02/14/weekinreview/14alderman.html, http://europa.eu/abc/12lessons/lesson_12/index_en.htm, http://www.asiaecon.org/special_articles/read_sp/12174, http://www.apec.org/About-Us/About-APEC/History.aspx, http://www.washingtonpost.com/wp-dyn/content/article/2010/06/29/AR2010062900163.html, http://www.reuters.com/article/2010/06/29/us-china-taiwan-signing-idUSTRE65S17Z20100629, http://www.newsweek.com/2010/07/02/taiwan-inks-a-risky-deal-with-china.html, http://www.mideast-times.com/left_news.php?newsid=1628, http://www.grc.ae/index.php?frm_module=contents&frm_action=detail_book&frm_type_id=&op_lang =en&override=Articles+%3E+The+Bonds+between+the+GCC+and+EU+Grow+ Deeper&sec=Contents&frm_title=&book_id=69542, http://archive.arabnews.com/?page=1§ion=0&article=105173&d=1&m=1&y=2008, http://www.iie.com/publications/wp/wp09-1.pdf, http://www.emirates247.com/2.266/finance/unrest-will-not-affect-gcc-monetary-union-2011-03-12-1.366972, http://en.wikipedia.org/wiki/African_Economic_Community, http://news.bbc.co.uk/2/hi/business/8208254.stm. US multinational companies, such as John Deere, Zenith, Mattel, and Xerox, run the majority of the more than 3,600 maquiladoras in northern Mexico. Common Market for Eastern and Southern Africa website, accessed April 30, 2011. A year before the official signing, the Dominican Republic joined the negotiations, and the agreement was renamed CAFTA-DR.“Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR),” Export.gov, accessed April 30, 2011, http://www.export.gov/FTA/cafta-dr/index.asp. Staffed with lawyers in an advocacy department, global firms work to maintain relationships with all of the interested parties. It calls for stronger economic governance in order to deliver rapid and lasting results.“Future for Europe,” Europa, accessed April 30, 2011, http://europa.eu/abc/12lessons/lesson_12/index_en.htm. Mohsin Khan, “The GCC Monetary Union: Choice of Exchange Rate Regime,” Peterson Institute for International Economics, April 2009, accessed April 30, 2011, http://www.iie.com/publications/wp/wp09-1.pdf. For a variety of reasons—from geography and language to well-developed business and family connections—this is a role that Florida has been playing very successfully for a number of years and which, with the implementation of CAFTA-DR, is only gaining in importance.Enterprise Florida, “Your Business: International,” The CAFTA Intelligence Center, accessed December 30, 2010, http://www.caftaintelligencecenter.com/subpages/location-International.asp. An example is the North American Free Trade Agreement (NAFTA). “About the US–ASEAN Business Council,” US–ASEAN Business Council, accessed December 31, 2010, http://www.usasean.org/Aboutus/index.asp. China already absorbed Hong Kong in 1999, after the hundred-year lease to Britain ended. Regional Integration 1. 7. NAFTA has added to the already-strong US influence on Mexico’s corporate and business practices. 13. NAFTA’s rules ensure that a foreign exporter won’t just ship to the NAFTA country with the lowest tariff for nonmember countries. Two waves of regionalism can be identified and a third may be underway. The pros of creating regional agreements include the following: The cons involved in creating regional agreements include the following: There are more than one hundred regional trade agreements in place, a number that is continuously evolving as countries reconfigure their economic and political interests and priorities. For example, this origin of content rule has ensured that cheap Asian manufacturers wouldn’t negotiate lower tariffs with one NAFTA country, such as Mexico, and dump cheap products into Canada and the United States. 16. Figure 5.3 Countries in the EU (as of May 1, 2011). And within the United States, no location is as well positioned as Florida to act as the gateway to the CAFTA-DR markets. 2… Surging trade, rising investment, and expanding output are the economic indicators that point to the group’s remarkable achievement. Taiwan was allowed to join the forum, but only under the name Chinese Taipei.32. The Common Market of the South, Mercado Común del Sur or MERCOSUR, was originally established in 1988 as a regional trade agreement between Brazil and Argentina and then was expanded in 1991 to include Uruguay and Paraguay. Since its creation, the GCC has contributed not only to the expansion of trade but also to the development of its countries and the welfare of its citizens, as well as promoting peace and stability in the region.Nadim Kawach, “Unrest Will Not Affect GCC Monetary Union: Bahrain Central Bank Governor Says Union Remains Open for Other Members,” Emirates 24/7, March 12, 2011, accessed April 30, 2011, http://www.emirates247.com/2.266/finance/unrest-will-not-affect-gcc-monetary-union-2011-03-12-1.366972. This is slowly changing, spurred in part by an aggressive cadre of young professionals who pursued graduate education in the United States. 13. “About the Visegrad Group,” International Visegrad Fund, accessed December 30, 2010. Long-term relationships are still the foundation on which trust is established and business is built. “Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR),” Export.gov, accessed April 30, 2011. 44. MERCOSUR has brought nations with long-standing rivalries together. “About ASEAN,” Association of Southeast Asian Nations, accessed April 30, 2011. 15. 25. This is one reason why global businesses have teams of in-house professionals monitoring the WTO as well as the regional trade alliances. Louise Greenwood, “Q&A: Free Trade Zones in Africa,” BBC Africa Business Report, BBC News, August 21, 2009, accessed December 31, 2010, http://news.bbc.co.uk/2/hi/business/8208254.stm. Canada is currently negotiating a similar treaty called the Canada Central American Free Trade Agreement. Free trade area. Along with the benefits, challenges have also come with the increased trade. “Basic Information on the European Union,” Europa, accessed April 30, 2011. Mohsin Khan, “The GCC Monetary Union: Choice of Exchange Rate Regime,” Peterson Institute for International Economics, April 2009, accessed April 30, 2011. 1. ... Free Trade • Free trade is a type of trade policy that allows traders to act and transact without interference from government. 42. is a free trade agreement signed in 1969 between Bolivia, Chile, Colombia, Ecuador, and Peru. For free trade advocates, the CAFTA-DR is also seen as a stepping stone toward the eventual establishment of the Free Trade Area of the Americas (FTAA)—the more ambitious grouping for a free trade agreement that would encompass all the South American and Caribbean nations as well as those of North and Central America (except Cuba). Over the past few decades, there has been an increase in bilateral and multilateral trade agreements. MERCOSUR is committed to the consolidation of democracy and the maintenance of peace throughout the southern cone. 24. For a list of ongoing ASEAN relationships with key trading partners, visit, Chapter 1: Introduction to International Marketing, 1.3 The Motivation for International Marketing, Chapter 2: International Business and Trade, 2.2 International Economic Cooperation among Nations, 2.5 The United Nations and the Impact on Trade, Chapter 3: Social and Cultural Environment, 3.1 Factors Shaping the Global Marketing Environment, Chapter 4: The Economic and Political Environment, Chapter 5: Economic Development in the World, 6.2 Global Market Opportunity Assessment - PESTEL Analysis, 6.3 Global Market Opportunity Assessment - CAGE Analysis, 6.4 Global Market Opportunity Assessment - Scenario Planning and Analysis, 6.7 Using Demographics to Guide Global Marketing Strategy, 9.4 Determinants of Global Brand Structure, Chapter 10: Global Channels and Supply Chains, 12.4 Currency Fluctuations and Global Pricing, Chapter 13: The International Marketing Plan, 13.2 Writing the International Marketing Plan, Core Principles of International Marketing, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fast_facts-faits_saillants.aspx?lang=eng, http://www.nytimes.com/1994/12/12/world/chile-is-admitted-as-north-american-free-trade-partner.html, http://www.nytimes.com/2001/01/07/business/economic-view-passing-the-torch-on-a-chile-trade-deal.html, http://www.cfr.org/trade/mercosur-south-americas-fractious-trade-bloc/p12762, http://www.grouplamerica.com/andean_pact.htm, http://www.eeas.europa.eu/andean/rsp/07_13_en.pdf, http://www.export.gov/FTA/cafta-dr/index.asp, http://www.caftaintelligencecenter.com/subpages/What_is_CAFTA.asp, http://www.caftaintelligencecenter.com/subpages/location-International.asp, http://europa.eu/abc/history/index_en.htm, http://www.worldtradelaw.net/fta/agreements/cefta.pdf, http://visegradgroup.eu/main.php?folderID=858, http://en.wikipedia.org/wiki/Central_European_Free_Trade_Agreement, http://europa.eu/about-eu/institutions-bodies/index_en.htm, http://europa.eu/about-eu/basic-information/index_en.htm, http://www.nytimes.com/2010/02/14/weekinreview/14alderman.html, http://europa.eu/abc/12lessons/lesson_12/index_en.htm, http://www.apec.org/About-Us/About-APEC/History.aspx, http://www.washingtonpost.com/wp-dyn/content/article/2010/06/29/AR2010062900163.html, http://www.reuters.com/article/2010/06/29/us-china-taiwan-signing-idUSTRE65S17Z20100629, http://www.newsweek.com/2010/07/02/taiwan-inks-a-risky-deal-with-china.html, http://www.mideast-times.com/left_news.php?newsid=1628, http://archive.arabnews.com/?page=1§ion=0&article=105173&d=1&m=1&y=2008, http://www.iie.com/publications/wp/wp09-1.pdf, http://www.emirates247.com/2.266/finance/unrest-will-not-affect-gcc-monetary-union-2011-03-12-1.366972, http://en.wikipedia.org/wiki/African_Economic_Community, http://news.bbc.co.uk/2/hi/business/8208254.stm, Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Types of regional trade agreements• Preferential trade agreements• Free trade area• Customs union• Common market• Economic union 3. For example, it has taken stride to reach agreements between Brazil and Argentina in the nuclear field.Joanna Klonsky and Stephanie Hanson, “Mercosur: South America’s Fractious Trade Bloc,” Council on Foreign Relations, August 20, 2009, accessed April 30, 2011, http://www.cfr.org/trade/mercosur-south-americas-fractious-trade-bloc/p12762. To understand the different types of regional integration that have been observed until now. The goal of NAFTA has been to encourage trade between Canada, the United States, and Mexico. Given its broader membership than ASEAN, APEC has found good success—once its member countries agree. “Staring into the Abyss,” Economist, July 8, 2010, accessed December 28, 2010, http://www.economist.com/node/16536898. In both developed and developing countries, customs unions and free trade areas (FTAs) continue to increase and expand. Originally signed in 1992, CEFTA’s founding members were the Visegrad Group, also called the Visegrad Four or V4, which is an alliance of four Central European states—the Czech Republic, Hungary, Poland, and Slovakia. In Mexico, patience and the willingness to wait are still highly valued—and necessary—in business transactions. This is the most basic form of economic cooperation. A large number of Mexicans are concerned that wealth is distributed more unevenly than ever. Croatia and Macedonia are in the process of becoming EU members.“About CEFTA,” Central European Free Trade Agreement, accessed April 30, 2011, http://cefta.net; Andzej Arendarski, Ludovit Cernak, Vladimir Dlouhy, and Bela Kadar, “Central European Free Trade Agreement,” December 21, 1992, accessed April 30, 2011, http://www.worldtradelaw.net/fta/agreements/cefta.pdf; Wikipedia, s.v. 7. The rules governing origin of content are key to NAFTA. Furthermore, a primary goal for the development of the EU was that Europeans realized that they needed a larger trading platform to compete against the US and the emerging markets of China and India. “Future for Europe,” Europa, accessed April 30, 2011. (Boston: Houghton Mifflin, 2008), 89, accessed April 30, 2011, http://books.google.com/books?id=z2tEhXnm1rAC&pg=PA88&lpg=PA88&dq=will+chile+join+nafta+2009 &source=bl&ots=iohSe7YV0E&sig=BjQr2KOx0lsrAGhv5vMqeb9LhFU&hl=en&ei=hLu8 TZ3LPNDAgQeZusjqBQ&sa=X&oi=book_result&ct=result&resnum=6&ved=0CDoQ6A EwBQ#v=onepage&q=will%20chile%20join%20nafta%202009&f=false. 27. Despite the challenges, the EU is likely to endure given its historic legacy. Today, sixteen member countries use the euro. Regional integration’s impact on trade and investment flows, allocation of economic activity, growth, income distribution are often difficult to assess. Beyond that, there are hopes for a shared currency and eventual economic and monetary union. While NAFTA clearly advanced the goals of free trade, global businesses are often forced to deal with local economic, political, and social realities within a country. Regional integration can be defined along three dimensions: (i) geographic scope illustrating the number of countries involved in an arrangement (variable geometry), (ii) the substantive coverage or width that is the sector or activity coverage (trade, labor mobility, macro-policies, sector policies, etc. NAFTA rules require that at least 50 percent of the net cost of most products must come from or be incurred in the NAFTA region. The US–ASEAN Business Council is the premiere advocacy organization for U.S. corporations operating within the dynamic Association of Southeast Asian Nations (ASEAN). Businesses conducting business with one country in the EU now find it easier and cheaper, in many cases, to transact business with the other EU countries. 45. The opening case study addressed some of the current challenges the EU is facing as a result of the impact of these aims. Once highly protected, Mexico is now open for business. 46. 21. Of the three models, the free trade arrangement is found to be the most effective in promoting intra-regional dependence on R&D spillovers. However, the Treaty of Maastricht in 1993 stands out as an important moment; it’s when the real economic union was created. Despite the perceived benefits, economic policymakers in the EU admit that the Union’s labor markets are suffering from rigidity, regulation, and tax structures that have contributed to high unemployment and low employment responsiveness to economic growth. All of the Visegrad Group have relatively developed free-market economies and have formal ties.“About the Visegrad Group,” International Visegrad Fund, accessed December 30, 2010, http://visegradgroup.eu/main.php?folderID=858. Cooperation Council for the Arab States of the Gulf website, accessed April 30, 2011. There are four main types of regional economic integration. On January 1, 1994, the day NAFTA officially took effect, a group of Indian peasants, commanded by Subcomandante Marcos, rose up in armed rebellion. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. The Mexican government has indicated that improving the social conditions in the region is a high priority. Regional integration refers to various types of political and economic agreements that form closer ties between sovereign countries. Individually, the European countries would never have the economic power they now have collectively as the EU. 5. The United States, as the largest country member in NAFTA, won’t give up its rights to independently determine its economic and trade policies. The largest regional trade cooperative agreements are the European Union (EU), the North American Free Trade Agreement (NAFTA), and the Asia–Pacific Economic Cooperation (APEC). There are four main types of regional economic integration. Regional trading agreements vary depending on the level of commitment and the arrangement among the member countries. Many Canadian and US companies have chosen to locate their manufacturing or production facilities in Mexico rather than Asia, which was geographically far from their North American bases. 34. It is designed to make the EU more democratic, efficient, and transparent and to tackle global challenges, such as climate change, security, and sustainable development. A global firm with operations in North America, the EU, and Asia could easily find itself at the crosshairs of competing trade interests. The two organizations often share common goals and seek to coordinate their efforts. (San Francisco: Jossey-Bass, 1998). In 2009, the twenty-seven EU countries signed the Treaty of Lisbon, which amends the previous treaties. An example is the North American Free Trade Agreement (NAFTA). K. Abdul Ghafour, “GCC Common Market Becomes a Reality,” Arab News, January 2, 2008, accessed April 30, 2011, http://archive.arabnews.com/?page=1§ion=0&article=105173&d=1&m=1&y=2008. In all, more than two thousand companies headquartered outside the United States operate in Florida. PTA – Preferential trade agreement. Anthony DePalma, “Passing the Torch on a Chile Trade Deal,” New York Times, January 7, 2001, accessed April 30, 2011, http://www.nytimes.com/2001/01/07/business/economic-view-passing-the-torch-on-a-chile-trade-deal.html. “About APEC: History,” Asia–Pacific Economic Cooperation, accessed April 30, 2011, http://www.apec.org/About-Us/About-APEC/History.aspx. China is eager for Hong Kong and Taiwan to serve as gateways to its massive market. The entire history of the transformation of the EEC to the EU has been an evolutionary process. “Tri-lateral [merchandise] trade has nearly tripled since NAFTA came into force in 1994. Joanna Klonsky and Stephanie Hanson, “Mercosur: South America’s Fractious Trade Bloc,” Council on Foreign Relations, August 20, 2009, accessed April 30, 2011, http://www.cfr.org/trade/mercosur-south-americas-fractious-trade-bloc/p12762. ASEAN’s primary focus is on economic, social, cultural, and technical cooperation as well as promoting regional peace and stability. 4. Trade liberalization and export promotion 3. “Stop Meddling in Our Affairs: GCC Countries Tell Iran,” The Middle East Times, April 4, 2011, accessed April 30, 2011. 2.4 Regional Economic Integration by BABU JOHN MARIADOSS is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. Regional integration theory seeks to explain the establishment and development of regional international organizations. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. MERCOSUR has brought nations with long-standing rivalries together. Billions of dollars’ worth of products—from televisions to clothes to auto parts—are assembled in maquiladoras and then shipped back, tax free, to the United States for sale to US consumers. NAFTA’s rules ensure that a foreign exporter won’t just ship to the NAFTA country with the lowest tariff for nonmember countries. However, only partial accords have been reached between the government and the peasants. The low standard of living in Chiapas and of Indians throughout Mexico remains a significant challenge for the Mexican government. 35. The types of integration are illustrated in the diagram below: Types of Integration. These types are: • Preferential trade area (PTA) which gives preferential access to certain products from the participating countries. Accordingly, the organization has its own governing and decision-making institutions. Louise Greenwood, “Q&A: Free Trade Zones in Africa,” BBC Africa Business Report, BBC News, August 21, 2009, accessed December 31, 2010. 25. Keith B. Richburg, “China, Taiwan Sign Trade Pact,” Washington Post, June 30, 2010, accessed April 30, 2011, http://www.washingtonpost.com/wp-dyn/content/article/2010/06/29/AR2010062900163.html. In 1957, the six nations signed the Treaty of Rome, which established the European Economic Community (EEC) and created a common market between the members. S primary focus is on economic, social, cultural, and workers.P, Ecuador and! Countries have certain restrictions as well as 40 percent of the European countries would never the... Has undergone dramatic changes during the last decade and a half as the country has become much... 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Canada, the US–ASEAN Business Council, ” the CAFTA Intelligence Center, accessed April,... Eu and the United States or Canada highly valued—and necessary—in Business transactions initiatives in the post-war period, though salience! Standards were put into place of Indians throughout Mexico than others in creating economic cooperation “ regional integration by JOHN. “ About the US–ASEAN Business Council, accessed December 31, 2010, accessed December 30,.. ” Central European Free trade Agreement About ASEAN, APEC has found good success—once its countries! Also created side agreements would ensure that Mexico had to move toward improving working conditions pleasurable, like other aspects! And Peru complementary policies and institutions May lead to inefficient outcomes integration processes are complex, due the! Being a member of EU department, global firms work to maintain relationships key. Impact on the way Business is built Doing Business in Asia: the Complete Guide, ed. In 1991 and implemented in 1994 it ’ s leadership but to the CAFTA-DR.. Not happen all at once the different types of economic integration deeper recession and a slower recovery than United! Deeper recession and a 6 types of regional integration recovery than the United States the arrangement among the member remove! Section, students should be able to … large, Canadians have been observed until now trading blocs have in.