Cross-national cooperation and agreements
Encyclopedia
Integration is a political and economic agreement among countries that gives preference to member countries to the agreement . General integration can be achieved in three different approachable ways: through the World Trade Organization
(WTO), bilateral integration, and regional integration
. In bilateral integration, only two countries economically cooperate with one and other; whereas in regional integration, several countries within the same geographic distance become joint to form organizations such as the European Union
(EU) and the North American Free Trade Agreement
(NAFTA). Indeed, factors of mobility like capital, technology and labour are indicating strategies for cross-national integration along with those mentioned above.
(GATT) in 1995 and has 125 member nations.currently 153 member are part of WTO. Many believe GATT initiated rampant liberalization in trade in 1947 and its move contributed to the expansion of trade all over the world by eliminating tariff and quotas. Moreover, WTO continued GATT's principle with more multilateral forum, which enables governments to settle agreements or to dispute them regarding trade.
Rapid growth of trade among nations has forced the agreement to be acknowledged as a fundamental basis for the member nations to follow certain rules and regulations as the signatories of the agreement. As a result, WTO expanded its mission to include trade in services, investments, intellectual property, sanitary measures, plant health, agriculture, and textiles, as well as technical baariers to trade.
. It began as a free trade agreement with the goal to become a customs union and to integrate in other ways. The formation of the European Parliament
and the establishment of a Euro
the common currency make EU the most ambitious in comparison to other regional trade groups . It progressed from being the European Economic Community (EEC) to the European Community (EC) to finally the European Union. Iceland, Liechtenstein, Norway, and Switzerland who decided not to leave European Free Trade Area
are linked together with the EU as a customs union . The EU comprises 27 countries, including 12 countries from mostly Central and Eastern Europe that joined since 2004. The EU abolished trade barriers on intra-zonal trade, instituted a common external tariff
, created a common currency, the euro .
The implications of the EU for corporate strategy are:
is designed to eliminate tariff
barriers and liberalize investment opportunities and trade in services. NAFTA includes Canada
, Mexico
, and the United States
, where went into effect in 1994. The United States and Canada historically have had various forms of mutual economic cooperation. They signed the Canada-United States Free Trade Agreement
effective January 1, 1989, which eliminated all tariffs on bilateral trade by January 1, 1998. In February 1991, Mexico approached the United States to establish a free trade agreement. The formal negotiations that began in June 1991 included Canada. The resulting North American Free Trade Agreement became effective on January 1, 1994.
The key provisions in NAFTA are:
and South America
. The major reason for these different groups in Central and South America entering into collaboration was market size . The Caribbean Community and Common Market (CARICOM) and the Central American Common Market (CACM) are both found in Central America
. The two major blocs in South America
are the Andean Community (CAN) and the Southern Common Market (MERCOSUR) which is the major trade group. MERCOSUR comprises Brazil, Argentina, Paraguay, and Uruguay. It generates 75 percent of South America’s GDP and this makes MERCOSUR the fourth largest trading bloc in the world after the EU, NAFTA, and the Association of Southeast Asian Nations
(ASEAN) .
as in the EU or NAFTA because most Asian countries have relied on U.S. and European markets for their exports . The Association of Southeast Asian Nations
(ASEAN), formed in 1967, consisted of the following countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The ASEAN Free Trade Area
(AFTA), formed officially in 1993, was for the purpose of cutting tariffs on inter-regional trade to a maximum of 5% by 2008 . ASEAN is the third largest free trade agreement in the world after the EU and NAFTA and above MERCOSUR. The Asia Pacific Economic Cooperation (APEC), founded in 1989, was to promote multilateral economic cooperation in trade and investment in the Pacific Rim . APEC is composed of 21 countries that border the Pacific Rim; progress toward free trade is hampered by size and geographic distance between member countries and the lack of a treaty.
that are registered with the WTO, including:
Created in 2002 by 53 African nations, the African Union
took the place of the Organization of African Unity (OAU). The OAU was established in 1963 and focuses its energy and resources on political issues in Africa (notably colonialism and racism) and the pursuit of market liberalization and economic growth in Africa .
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO), bilateral integration, and regional integration
Regional integration
Regional integration is a process in which states enter into a regional agreement in order to enhance regional cooperation through regional institutions and rules...
. In bilateral integration, only two countries economically cooperate with one and other; whereas in regional integration, several countries within the same geographic distance become joint to form organizations such as the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
(EU) and the North American Free Trade Agreement
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
(NAFTA). Indeed, factors of mobility like capital, technology and labour are indicating strategies for cross-national integration along with those mentioned above.
The World Trade Organization
The WTO is one of the most effective trade agreements among nations. The WTO replaced the General Agreement on Tariffs and TradeGeneral Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
(GATT) in 1995 and has 125 member nations.currently 153 member are part of WTO. Many believe GATT initiated rampant liberalization in trade in 1947 and its move contributed to the expansion of trade all over the world by eliminating tariff and quotas. Moreover, WTO continued GATT's principle with more multilateral forum, which enables governments to settle agreements or to dispute them regarding trade.
Rapid growth of trade among nations has forced the agreement to be acknowledged as a fundamental basis for the member nations to follow certain rules and regulations as the signatories of the agreement. As a result, WTO expanded its mission to include trade in services, investments, intellectual property, sanitary measures, plant health, agriculture, and textiles, as well as technical baariers to trade.
The European Union (EU)
The largest and most comprehensive regional economic group is the EUEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
. It began as a free trade agreement with the goal to become a customs union and to integrate in other ways. The formation of the European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...
and the establishment of a Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
the common currency make EU the most ambitious in comparison to other regional trade groups . It progressed from being the European Economic Community (EEC) to the European Community (EC) to finally the European Union. Iceland, Liechtenstein, Norway, and Switzerland who decided not to leave European Free Trade Area
European Free Trade Area
At present, there are three multi-lateral free trade areas in Europe, plus the European Union which has a single market, and one former-FTA in recent history...
are linked together with the EU as a customs union . The EU comprises 27 countries, including 12 countries from mostly Central and Eastern Europe that joined since 2004. The EU abolished trade barriers on intra-zonal trade, instituted a common external tariff
Common external tariff
When a group of countries form a customs union they must introduce a common external tariff. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering...
, created a common currency, the euro .
The implications of the EU for corporate strategy are:
- Companies need to determine where to produce products.
- Companies need to determine what their entry strategy will be.
- Companies need to balance the commonness of the EU with national differences .
North American Free Trade Agreement (NAFTA)
NAFTANorth American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
is designed to eliminate tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
barriers and liberalize investment opportunities and trade in services. NAFTA includes Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, where went into effect in 1994. The United States and Canada historically have had various forms of mutual economic cooperation. They signed the Canada-United States Free Trade Agreement
Canada-United States Free Trade Agreement
The Free Trade Agreement was a trade agreement signed by Canada and the United States on October 4, 1988. The agreement, finalized by October 1987, removed several trade restrictions in stages over a ten year period, and resulted in a great increase in cross-border trade...
effective January 1, 1989, which eliminated all tariffs on bilateral trade by January 1, 1998. In February 1991, Mexico approached the United States to establish a free trade agreement. The formal negotiations that began in June 1991 included Canada. The resulting North American Free Trade Agreement became effective on January 1, 1994.
The key provisions in NAFTA are:
- the harmonization of trade rules,
- the liberalization of restrictions on services and foreign investment,
- the enforcement of intellectual property rights,
- a dispute settlement process,
- regional labour laws and standards, and
- strengthened environmental standards .
Regional economic integration in the Americas
There are six major regional economic groups in the Americas and they can be further divided into Central AmericaCentral America
Central America is the central geographic region of the Americas. It is the southernmost, isthmian portion of the North American continent, which connects with South America on the southeast. When considered part of the unified continental model, it is considered a subcontinent...
and South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...
. The major reason for these different groups in Central and South America entering into collaboration was market size . The Caribbean Community and Common Market (CARICOM) and the Central American Common Market (CACM) are both found in Central America
Central America
Central America is the central geographic region of the Americas. It is the southernmost, isthmian portion of the North American continent, which connects with South America on the southeast. When considered part of the unified continental model, it is considered a subcontinent...
. The two major blocs in South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...
are the Andean Community (CAN) and the Southern Common Market (MERCOSUR) which is the major trade group. MERCOSUR comprises Brazil, Argentina, Paraguay, and Uruguay. It generates 75 percent of South America’s GDP and this makes MERCOSUR the fourth largest trading bloc in the world after the EU, NAFTA, and the Association of Southeast Asian Nations
Association of Southeast Asian Nations
The Association of Southeast Asian Nations, commonly abbreviated ASEAN rarely ), is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has...
(ASEAN) .
Regional economic integration in Asia
Regional economic integration has not been as successful in AsiaAsia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
as in the EU or NAFTA because most Asian countries have relied on U.S. and European markets for their exports . The Association of Southeast Asian Nations
Association of Southeast Asian Nations
The Association of Southeast Asian Nations, commonly abbreviated ASEAN rarely ), is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has...
(ASEAN), formed in 1967, consisted of the following countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The ASEAN Free Trade Area
ASEAN Free Trade Area
ASEAN Free Trade Area is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries....
(AFTA), formed officially in 1993, was for the purpose of cutting tariffs on inter-regional trade to a maximum of 5% by 2008 . ASEAN is the third largest free trade agreement in the world after the EU and NAFTA and above MERCOSUR. The Asia Pacific Economic Cooperation (APEC), founded in 1989, was to promote multilateral economic cooperation in trade and investment in the Pacific Rim . APEC is composed of 21 countries that border the Pacific Rim; progress toward free trade is hampered by size and geographic distance between member countries and the lack of a treaty.
Regional economic integration in Africa
There are several regional trade groups in AfricaAfrica
Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area...
that are registered with the WTO, including:
- the Southern Africa Development Community (SADC),
- the Common Market for Eastern and Southern AfricaCommon Market for Eastern and Southern AfricaThe Common Market for Eastern and Southern Africa, is a free trade area with nineteen member states stretching from Libya to Zimbabwe. COMESA formed in December 1994, replacing a Preferential Trade Area which had existed since 1981...
(COMESA), - the Economic and Monetary Community of Central Africa, and
- the West African Economic and Monetary Union (WAEMU) .
Created in 2002 by 53 African nations, the African Union
African Union
The African Union is a union consisting of 54 African states. The only all-African state not in the AU is Morocco. Established on 9 July 2002, the AU was formed as a successor to the Organisation of African Unity...
took the place of the Organization of African Unity (OAU). The OAU was established in 1963 and focuses its energy and resources on political issues in Africa (notably colonialism and racism) and the pursuit of market liberalization and economic growth in Africa .