Chapter 9 - Regional Economic Integration

Regional Economic Integration

Agreement among countries in a geographic region to reduce & ultimately remove tariff & non tariff barriers to the free flow of goods, services, & factors of production b/w each other

Free Trade Area

Group of countries committed to removing all barriers to the free flow of goods & services b/w each other but pursuing independent external trade policies

Rules of Origin

A certain percentage of the value of a good has to be produced by countries w/i the free trade area

European Free Trade Association (EFTA)

A free trade association including Norway, Iceland, Liechtenstein, & Switzerland

Customs Union

Group of countries committed to (1) removing all barriers to the free flow of goods & services b/w each other & (2) the pursuit of a common external trade policy

Common Market

Group of countries committed to (1) removing all barriers to the free flow of goods, services, & factors of production b/w each other & (2) the pursuit of a common external trade policy

Economic Union

Group of countries committed to (1) removing all barriers to the free flow of goods, services, & factors of production b/w each other; (2) adoption of a common currency; (3) harmonization of tax rates; (4) pursuit of a common external trade policy

Political Union

Central political apparatus coordinates economic, social, & foreign policy

Trade Creation

Trade created due to regional economic integration;
occurs when high cost domestic producers are replaced by low cost foreign w/i a free trade area

Trade Diversion

Trade diverted due to regional economic integration;
occurs when lower cost foreign suppliers outside a free trade area are replaced by higher cost suppliers w/i a free trade area

European Union (UN)

An economic & political union of 27 countries (2020) that are located in Europe

Treaty of Rome

The 1957 treaty that established the European Community

European Commission

Responsible for proposing EU legislation, implementing it, & montioring compliance

European Council

The heads of state of EU members & the president of the European Commission

European Parliament

Elected EU body that provides consultation on issues proposed by the European Commission

Treaty of Lisbon

The EU sanctions treaty that allowed the European Parliament to become the coequal legislator for almost all European laws

Court of Justice

Supreme appeals court EU law

Maastricht Treaty

Treaty agree to in 1992, but not ratified until 1/1/94, that committed the 12 member states of European Community to a closer economic & political union

Optimal Currency Area

Region in which similarities in economic activity make a single currency & exchange rate feasible instruments of macroeconomic

North American Free Trade Agreement (NAFTA)

Free trade area among Canada, Mexico, & US

US MX CA Agreement (USMCA)

Trade deal b/w US, MX, & CA ratified in 2020 that was negotiated as a replacement to NAFTA

Andean Community

A 1969 agreement among Bolivia, Chile, Ecuador, Colombia, & Peru to establish a customs union

Mercosur

Pact among Argentina, Brazil, Paraguay, & Uruguay to establish a free trade area

Central American Common Market

Trade pact among Costa Rica, El Salvador, Guatemala, Honduras, & Nicaragua, which began in the early 1960s but collapsed in 1969 due to war

Central America Free Trade Agreement (CAFTA)

Agreement of the member states of the Central American Common Market joined by the Dominican Republic to trade freely w/ the US

CARICOM

An association of English speaking Caribbean states that are attempting to establish a customs union

Caribbean Single Market & Economy (CSME)

The six CARICOM members that agreed to lower trade barriers & harmonize macroeconomic & monetary policies

Association of Southeast Asian Nations (ASEAN)

Formed in 1967, an attempt to establish a free trade area among Brunel, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Vietnam, & Thailand

EU UK Trade & Cooperation Agreement

Agreement bb/w the UK & the EU that specified the terms of post Brexit trade b/w the EU & UK