Regional Economic Integration

FTA (Free Trade Area) The goal of FTA is to abolish all tariffs between member countries Each member country maintains its own external tariff against non FTA countries

Customs Union
In addition to eliminating internal tariffs, member countries levy a common external tariff on goods being imported from non members. EU established a common external tariff in 1967 EU allows free mobility of production factors such as labor and capital & acts as a common market
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 Monetary Union is the decision to move to a common market eg the Euro The decision to move to a political union envisages a common Trade & Foreign policy.

European Union
It is the largest and most comprehensive of the Regional Economic groups It began as a FTA with the goal of becoming a customs union It led to the formation of the European Parliament Led to the establishment of a common currency Euro on Jan 1 1999.
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EEC
Started as the European Economic Community (EEC) , later called the European Community and finally the European Union Eu encompasses European Commission, European Council, European Parliament and European Court of Justice

European Commission
EC provides EUs political leadership Initiator of proposals for legislation Guardian of treaties Manager and executor of Union policies and of International trade relationship.

European Council
Council of ministers composed of different ministers of member countries Council can adopt commission proposed legislation, amend it or ignore it-It is the EUs ultimate decision making body. The Council has the ultimate authority in legislative matters Council of ministers has a presidency which rotates among the member states every 6 months
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European Parliament
The Parliament is composed of 624 members who are elected every five years Legislative power Control over budget Supervision of executive decisions Presents community legislation to the Parliament.
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European court of justice

Ensures constant interpretation and application of EU treaties Member States, EC Institutions, or individuals and companies may bring cases to court. The court of justice is relevant to MNCs because it deals mostly with economic matters.
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Euro
EU nations signed the Treaty of Maastricht In 1992 set steps to establish political union and monetary union. As of August 2005 : 12 of 25 members of EU had adopted the Euro. Euro is now one of the most widely traded currencies in the world. Easier for companies to establish pricing policies
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NAFTA (North American Free Trade Agreement)

NAFTA which includes Canada, Mexico and the United States, went into effect in 1994. US & Canada signed the Canada-US Free Trade Agreement effective Jan 1, 1989, which eliminated all tariffs on Bilateral Trade by Jan 1 1998. In Feb 1991 Mexico approached the US to establish a free trade agreement.
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NAFTA
Formal negotiations that began in June 1991 included Canada. The resulting North American Free Trade agreement became effective on January 1 1994. NAFTA was a powerful trading block with a combined population greater than the 15 member EU.
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NAFTA
Despite being a FTA extends far beyond tariff reductions WTO classifies NAFTA as a services agreement rather than just a free trade agreement. Canada has a GNI greater than 25 member EU.

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NAFTA covers the areas

Market Access-Tariff and non tariff barriers, rules of origin and government procurement. Trade rules-safeguards, subsidies, antidumping duties, health & safety standards Services-provides for the same safeguards for trade in services (consulting, engineering, software etc) that exist for trade in goods. Investment-establishes investment rules governing minority interests, portfolio investment, investments made by any company incorporated in a NAFTA country.
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 Rules of origin means that only goods that have been the subject of substantial economic activity within the free trade area are eligible for the more liberal tariff conditions created by NAFTA. Regional content rules-At least 50% of the net cost of most products must come from NAFTA region.
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NAFTA
Intellectual property-All three countries pledge to provide adequate and effective protection and enforcement of intellectual property rights Enforcement measures should not themselves become barriers to legitimate trade Dispute settlement process that will be followed. Desired to keep countries from taking unilateral action against an offending party.

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NAFTA special provisions

Labor standpoint- Improving working conditions and living standards Promoting compliance with & effective enforcement of labor laws Right to unionise

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NAFTA special provisions

Environmental standpoint Promotion of sustainable development Cooperation on the conservation, protection and enhancement of the environment Effective enforcement & compliance with domestic environmental laws.
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