REGIONAL ECONOMIC INTEGRATION

DEFINITION
INTERNATIONAL BUSINESS IS ALL COMMERCIAL TRANSACTIONS PRIVATE AND GOVERMENT BETWEEN TWO OR MORE COUNTRIES. PRIVATE COMPANIES DO FOR PROFIT GOVERNMENT MAY OR MAY NOT DO THE SAME. TRANSACTIONS INCLUDE:SALES, INVESTMENT AND TRANSPORTATION.

 COMPANIES ENGAGE IN INTERNATIONAL BUSINESS TO:*EXPAND SALES. *ACQUIRE RESOURCES. *RISK MINIMISATION.

REASONS FOR RECENT INTERNATIONAL GROWTH

EXPANSION OF TECHNOLOGY. LIBERALISATION OF CROSS BORDER MOVEMENTS. DEVELOPMENT OF SUPPORT SERVICES.

 CONSUMER PRESSURES. INCREASED GLOBAL COMPETITION.

IMPACT OF ENVIRONMENTAL FRAMEWORKS

CULTURAL ENVIRONMENT:*CULTURAL AWARENESS. *CROSS CULTURAL MANAGEMENT. POLITICAL ENVIRONMENT:*POLITICAL IDEOLOGIES. *TYPE OF GOVERNMENT POLICY. LEGAL ENVIRONMENT:*KINDS OF LEGAL SYSTEMS. *CONSUMER SAFEGUARDS.

ECONOMIC ENVIRONMENT:*TYPE OF ECONOMIC SYSTEM. *SIZE, GROWTH AND STABILITY POTENTIAL. *OWNERSHIP AND CONTROLPUBLIC V/S PRIVATE SECTOR. *AVAILABILITY OF FUNDS.

CLASSIFICATION OF COUNTRIES
CLASSIFICATION BY INCOME. CLASSIFICATION BY REGION. CLASSIFICATION BY ECONOMIC SYSTEM- MARKET, COMMAND OR MIXED ECONOMY.

REASONS FOR REGIONAL ECONOMIC INTEGRATION

DISTANCES GOODS HAVE TO TRAVEL IS REDUCED. TASTES AND PREFERENCES ARE SIMILAR. DISTRIBUTION CHANNELS CAN BE EASILY ESTABLISHED. MAY HAVE SIMILAR HISTORY AND BACKGROUND. MAY AGREE TO CO-ORDINATE THEIR POLICIES.

TYPES OF REGIONAL ECONOMIC INTEGRATION

FREE TRADE AREA:*ABOLISHES ALL TARRIFS ON GOODS BETWEEN MEMBER COUNTRIES. *TRADE STARTS WITH MODEST TARIFFS AND IS SUBSEQUENTLY ELIMINATED. CUSTOMS UNION:*COMMON EXTERNAL TARRIFS ON GOODS.

IMPORTED FROM NON MEMBERS. *ELIMINATION OF INTERNAL TARRIFS. COMMON MARKET:*ALLOWS FACTORS OF PRODUCTION LIKE LABOUR AND CAPITAL TO BE UTILISED WITHOUT RESTRICTIONS. ECONOMIC INTEGRATION:*GREATER ECONOMIC HARMONISATION. *COMMON ECONOMIC POLICIES. *SIMILAR CURENCIES. *FDI, EXPORT-IMPORT POLICY. *ROLE OF WORLD FINANCIAL INSTITUTION.

EFFECTS OF INTEGRATION
MORE TRADE IS GENERATED SIMPLIFICATION OF TRADE POLICIES. EASY EXCHANGE OF CURRENCIES. MORE FDI IN MEMBER COUNTRIES. FUNCTION AS GROUP AND NEGOTIATE PROFITABLY. COMPARATIVE ADVANTAGE TO MEMBERS. BETTER STANDING IN INTERNATIONAL FORUMS LIKE IMF, WTO, WORLD BANK ETC.

MAJOR REGIONAL TRADING GROUPS

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA). ESTABLISHED ON 01 JAN,1944. INCLUDES USA, MEXICO AND CANADA. IT COVERS THE FOLLOWING:*MARKET ACCESS- TARRIF, SUBSIDIES, HEALTH AND SAFETY STANDARDS. *SERVICES- SAME SAFEGUARD AS FOR GOODS. *INVESTMENT- FDI, PORTFOLIO INVESTMENT.

*INTELLECTUAL PROPERTY- TO PATENTS, COPYWRIGHTS ETC

. *DISPUTE SETTLEMENT.

 WINSTON CHURCHILL CALLS FOR UNITED STATES OF EUROPE IN 1946. INCEPTION IN 1957 AS EUROPEAN ECONOMIC COMMUNITY WITH SIX MEMBERS (BELGIUM, FRANCE, GERMANY, ITALY, LUXEMBOURG AND NETHERLANDS). EUROPEAN UNION COMES INTO EFFECT IN JANUARY 1993. EURO, SINGLE EUROPEAN CURRENCY COMES INTO EFFECT IN JANUARY 1999. FORMIDABLE ECONOMIC BLOC. ACCOUNTS FOR 1/5th OF WORLD TRADE.

EUROPEAN UNION TRADING BLOC

EUROPEAN UNION ORGANISATIONAL STRUCTURE

EUROPEAN COMMISSION. EUROPEAN COUNCIL. EUROPEAN PARLIAMENT. EUROPEAN COURT OF JUSTICE.

EUROPEAN COMMISSION
PROVIDES POLITICAL LEADERSHIP AND DIRECTION. FUNCTIONS ARE :*INITIALISING PROPOSAL FOR LEGISLATION. *GUARDIAN OF THE TREATIES. *MANAGER AND EXECUTOR OF UNION POLICIES AND INTERNATIONAL TRADE RELATIONSHIPS. *MAINTAINING ANNUAL BUDGET.

EUROPEAN COUNCIL
ALSO KNOWN AS COUNCIL OF MINISTERS. COMPOSED OF DIFFERENT MINISTERS OF THE MEMBER COUNTRIES. COUNCILS ARE FOR FOREIGN AFFAIRS, ECONOMY AND FINANCE AND AGRICULTURE ETC.

EUROPEAN PARLIAMENT
COMPOSED OF 626 MEMBERS, ELECTED EVERY FIVE YEARS. MEMBERSHIP BASED ON COUNTRY POPULATION. ITS RESPONSIBILITY ARE:*LEGISLATIVE POWERS. *CONTROL OVER BUDGET. *SUPERVISION AND EXECUTIVE DECISIONS. ~COMMISSION PRESENTS COMMUNITY LEGISLATION TO PARLIAMENT FOR APPROVAL. ~AFTER APPROVAL PARLIAMENT SUBMITS IT TO COUNCIL FOR ADOPTION.

EUROPEAN COURT OF JUSTICE

ENSURES INTERPRETATION AND APPLICATION OF EUROPEAN UNION TREATIES. IT IS AN APPEALS COURT FOR INDIVIDUALS, FIRMS, COUNTRIES TO RESOLVE DISPUTE WITH THE COMMISSION.

GATT AND WTO

GATT GENERAL AGREEMENT ON TARRIFS AND TRADE. ESTABLISHED IN 1947 WITH 23 MEMBERS. AGREEMENT FINALISED IN HAVANA CONFERENCE IN 1948. 8 ROUNDS OF TRADE NEGOTIATIONS CONCLUDED FROM 1947 TO 1993. GATT CEASED TO BE A SEPARATE INSTITUTION IN THE 8th ROUND AT URUGUAY. WTO FORMED ON 01 JAN,1995. HAS 148 MEMBERS

OBJECTIVES OF WTO
INTRODUCE SUSTAINABLE DEVELOPMENT BY OPTIMAL USE OF WORLDS RESOURCES. PROTECT AND PRESERVE ENVIRONMENT AS PART OF NATIONAL ECONOMIC DEVELOPMENT. ENSURE DEVELOPING COUNTRIES, ESPECIALLY LEAST DEVELOPED COUNTRIES SECURE BETTER GROWTH IN INTERNATIONAL TRADE.

FUNCTIONS OF WTO
PROMOTE TRADE WITHOUT DISCRIMINATION. FACILITATE IMPLEMENTATION, ADMINISTRATION AND OPERATION OF MULTILATERAL TRADE AGREEMENTS. SERVE AS A TRADE REVIEW MECHANISM. ACT AS DISPUTE SETTLEMENT BODY.

ORGANISATION OF WTO
HEADED BY MINISTERIAL CONFERENCE. MEETS EVERY TWO YEARS.EACH COUNTRY HAS EQUAL VOTE. IS EMPOWERED TO MAKE ANY DECISION. GENERAL COUNCIL HAS THREE UNITS:*COUNCIL FOR TRADE IN GOODS *COUNCIL FOR TRADE IN SERVICES. *COUNCIL FOR TRADE RELATED ASPECTS OF IPR. ~HAS FOLLOWING COMMITTEES WHICH REPORT TO GENERAL COUNCIL. *COMMITTEE ON TRADE AND DEVELOPMENT. *COMMITTEE ON BALANCE OF PAYMENT

*COMMITTEE ON BUDGET AND FINANCE ADMINISTRATION. *COMMITTEE ON PLURILATERAL AGREEMENTS ON CIVIL AIRCRAFTS, GOVERNMENT PROCUREMENT, DAIRY PRODUCTS AND BOVINE MEAT.

INTERNATIONAL FINANCIAL INSTITUTIONS

IMF (EST- DEC 27,1945) PROMOTE INTERNATIONAL MONETARY CO-OPERATION. EXPANSION OF INTERNATIONAL TRADE. ENSURE EXCHANGE RATE STABILITY. ELIMINATE DISEQUILIBRIUM IN MEMBERS BALANCE OF PAYMENT.

OTHER FINANCIAL INSTITUTIONS

INTERNATIONAL DEVELOPMENT ASSOCIATION - PROVIDES ASSISTANCE TO POOREST DEVELOPING COUNTRIES. (EST- 1960). MULTILATERAL INVESTMENT GUARANTEE AGENCY- EST IN 1988. ENCOURAGES FLOW OF FDI. ACTS AS AN INSURANCE AGENCY AGAINST NON COMMERCIAL RISKS AS WARS, EARTHQUAKES ETC.

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