IEP~Session 10

7/27/2019 IEP~Session 10

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Amity Business School

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MBA 2013, 3rd Semester

INTERNATIONAL ECONOMICS AND POLICY

Amanpreet Kang


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1. International Economics, Francis Cherunilam (4th Edition),Mc Graw Hill

2. International Economics, BO Sodersten and Geoffrey Reed

(3rd Edition), Macmillan

3. International Economics, Paul Krugman and Maurice Obstfeld(6th Edition), Pearson Education

4. Economics, Samuelson & Nordhaus (18th Edition), Tata McGraw Hill

References


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Benefits:

1. Help to achieve greater integration at regional level

2. Positive production and consumption effects

3. Reduce the costs of trade by harmonizing regulations and standards

4. Increase credibility of reform initiatives and strengthen securityarrangements between partners

5. Help governments to test the benefits of free trade

Disadvantages:1. Promote regionalism at the expense of multilateralism. RIAs should be

conceived and developed in a manner that finally leads to multilateral

liberalization.

Benefits and Disadvantages of RIAs


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Disadvantages:

Promote regionalism at the expense of multilateralism. RIAs should be

conceived and developed in a manner that finally leads to multilateral

liberalization.

Regional agreements provide varying levels of protection againstexternal parties and lead to trade diversion and application of rules of

origin and differing standards. This makes international trade more

complex and costly.

Increasing number of RIAs risk transparency of trading rules posing

threat to world trade. Affect internal dynamics of trade liberalization in a political economy

sense (RTAs exclude difficult sectors from coverage)

These tend to distract attention and energy from multilateral negotiations

Benefits and Disadvantages of RIAs


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The European Union was set up with the aim of ending the frequent warsbetween neighbors.

In 1950, the European Coal and Steel Community started uniting Europeancountries economically and politically.

Founders: Belgium, France, Germany, Italy, Luxembourg, Netherlands.

In 1957, the Treaty of Rome creates the European Economic Community(EEC), or Common Market.

In 1962, EU countries stopped charging custom duties when they trade witheach other. The EU started its common agricultural policy giving thecountries joint control over food production. Farmers are paid the same

price for their produce. Resulted in surplus in 1990s

European Union


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Members: Denmark, UK and Ireland joined in 1973, Greece in 1981,

Portugal, Austria, Finland and Sweden in 1995, Czech Republic,

Cyprus, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia

and Slovakia joined in 2004 and some countries of Eastern Europe later

In 1987 the Single European Act is signed to sort out problems with the

free-flow of trade across EU borders and created Single Market.

In 1993 Single Market completed with 'four freedoms' of: movement of

goods, services, people and money. Maastricht Treaty on EuropeanUnion in 1993 and Treaty of Amsterdam in 1999.

European Union


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Euro launched in 2002, and constitution of EU in 2004

The 27 EU countries sign the Treaty of Lisbon, which amends the

previous Treaties. It is designed to make the EU more democratic,

efficient and transparent.

Initial objective: to co-operate and stop war between countries and currently

focus is on transition economies and democracy.

Institutions: provided as a note (check Amizone)

Members: 27 (in 2007), countries of east and west Europe

Type: Economic and Monetary Union

European Union


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Countries: USA, Mexico and Canada

Type: Free Trade Area

North-South co-operation

The North American Free Trade Agreement (NAFTA) is trade

agreement that sets the rules of trade and investment between Canada,the United States, and Mexico.

Entered into force on January 1, 1994, NAFTA and has eliminated most

tariff and non-tariff barriers to free trade and investment between the

three NAFTA countries.

Since NAFTA came into effect, trade and investment levels in NorthAmerica have increased, bringing strong economic growth, job creation,

and better prices and selection in consumer goods. North American

businesses, consumers, families, workers, and farmers have all

benefited.

NAFTA


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When implemented, NAFTA immediately lifted tariffs on the majority of

goods produced by the NAFTA partners and there was phased

elimination, over 15 years, of most remaining barriers to cross-border

investment and to the movement of goods and services between the

three countries.

Rules of Origin:

Tariffs foregone on imported goods originating in the other NAFTA

countries.

Rules of origin help deciding which goods qualify for PTA underNAFTA.

They ensure that NAFTAs benefits are not extended to goods imported

from non-NAFTA countries that have undergone only minimal

processing in North America.

The exporter must complete a certificate of origin

NAFTA


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Merchandise trade among the NAFTA partners has more than tripled,

reaching US$946.1 billion in 2008.

Canada-U.S. trade has nearly tripled, while trade between Mexico and

the U.S. has more than quadrupled.

North American economy has more than doubled in size. The combined gross domestic product (GDP) for Canada, the United

States, and Mexico surpassed US$17 trillion in 2008, up from US$7.6

trillion in 1993.

In 2008, Canada and the United States inward FDI from NAFTA

partner countries reached US$469.8 billion. Mexico has become one of the largest recipients of FDI among

emerging markets, and received US$156 billion from its partners

between 1993 and 2008.

North American employment levels have climbed nearly 23% since

1993, representing a net gain of 39.7 million jobs.

NAFTA


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Merchandise trade among the NAFTA partners has more than tripled,

reaching US$946.1 billion in 2008.

Canada-U.S. trade has nearly tripled, while trade between Mexico and

the U.S. has more than quadrupled.

North American economy has more than doubled in size. The combined gross domestic product (GDP) for Canada, the United

States, and Mexico surpassed US$17 trillion in 2008, up from US$7.6

trillion in 1993.

In 2008, Canada and the United States inward FDI from NAFTA

partner countries reached US$469.8 billion. Mexico has become one of the largest recipients of FDI among

emerging markets, and received US$156 billion from its partners

between 1993 and 2008.

North American employment levels have climbed nearly 23% since

1993, representing a net gain of 39.7 million jobs.

NAFTA

Documents

IEP~Session 10