Transcript Document

chapter four
International Institutions from an
International Business
Perspective
McGraw-Hill/Irwin
International Business, 11/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
 Understand the influence of international
organizations
 Discuss the structure and activities of the United
Nations
 Understand the World Trade Organization
 Understand the European Union, NAFTA and other
regional trade agreements
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Learning Objectives
 Know about the Organization for Economic
Cooperation and Development
 Describe the major purpose and effectiveness of
OPEC
 Outline the four major levels of economic
integration agreements
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Figure 4.1 International Institutions by
purpose
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International Political Institutions
• The United Nations
– International organization of 191 membernations dedicated to the promotion of peace
and global stability; has many functions
related to business
– General Assembly
• Deliberative body of the UN made up of
all member-nations, each with one vote
regardless of size, wealth, or power
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International Political Institutions
– Security Council
• Main policy-setting body of the UN,
composed of 15 members including 5
permanent members
– Economic and Social Council (ECOSOC)
• UN body concerned with economic and
social issues such as trade, development,
education, and human rights
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International Political Institutions
– International Court of Justice (ICJ)
• UN body that renders legal decisions
involving disputes between national
governments
– Secretariat
• The staff of the UN, headed by the
secretary-general
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Figure 4.2 Millennium Development
Goals Chart of Progress
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Figure 4.2 Millennium Development
Goals Chart of Progress
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Cooperative Military and Security
Agreements
• North Atlantic Treaty Organization
(NATO)
– Security alliance of 26 North American and
European nations (Map 4.3)
• Collective Security Treaty Organization
(CSTO)
– Security alliance of six members of the
Commonwealth of Independent States
(former Union of Soviet Socialist Republics)
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Cooperative Military and Security
Agreements
• Association of Southeast Asian Nations
(ASEAN)
– Ten-member body formed to promote peace
and cooperation in Southeast Asia
(Map 4.4)
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Map 4.3 & 4.4
NATO Map
Map of ASEAN Members
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International Economic Institutions
• World Trade Organization (WTO)
– A multinational body of 149 members that
deals with rules of trade between nations
– Outgrowth of General Agreement on Tariffs
and Trade (GATT), that functioned to
encourage trade liberalization from 1947 to
1995
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International Economic Institutions
• Most favored nation (MFN) clause
– Agreement that GATT member-nations
would treat all members equally in trade
matters
• Uruguay Round
– The last extended conference of GATT
negotiations (table 4.1)
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Table 4.1 Gatt Rounds
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International Economic Institutions
• WTO Principles
– Trade will be without discrimination
– Trade should be freer, with trade barriers
negotiated downward
– Trade should be predictable
– Trade should be more competitive
– Trade should be more beneficial for less
developed countries, encouraging
development and economic reform
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International Economic Institutions
• WTO Challenges
– Trade-related intellectual property rights
(TRIPS)
• WTO agreement that protects copyrights,
trademarks, trade secrets, and other
intellectual property matters
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Organisation For Economic
Cooperation and Development
• Organisation For Economic Cooperation
and Development (OECD)
– Group of developed countries dedicated to
promoting economic expansion in its
member-nations (Table 4.2)
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Table 4.2 OECD Member Countries
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Other Economic Institutions
• Organization of Petroleum Exporting
Countries
– Cartel of 11 petroleum exporting countries
(Table 4.3)
• The Group of Eight (G8)
– Group of government leaders from major
industrialized nations that meets regularly to
discuss issues of concern (Figure 4.5)
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Table 4.3 World Petroleum Products
Consumption by Region, 1960-2004
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Figure 4.5 The G8 Members
(www.undp.org)
http://atlas.nrcan.gc.ca/site/english/maps/reference/international/g8/map.jpg
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Economic Integration
• Free trade area (FTA)
– Area in which tariffs among members have been
eliminated, but members keep their external tariffs
• Customs Union
– Collaboration that adds common external tariffs to
an FTA
• Common Market
– Customs union that includes mobility of services,
people, and capital within the union
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North American Free Trade Agreement
(NAFTA)
• NAFTA
– Established January 1, 1994
– Agreement creating a free trade area
among Canada, Mexico, and the United
States
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European Free Trade Agreement
(EFTA)
• EFTA
– Founded in 1960 by seven European
countries:
• Austria, Denmark, Norway, Portugal,
Sweden, Switzerland, Finland, Iceland,
Liechtenstein, and the United Kingdom
– Today, a 4-nation non-EU FTA in Europe:
Norway, Iceland, Liechtenstein, Switzerland
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African Trade Agreements
• African Trade Agreement (Figure 4.7) –
– Promote economic growth the continent
– Economic Community of West African
States (ECOWAS)
– Common Market for Eastern and Southern
Africa (COMESA)
– Southern African Development Community
(SADC)
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Figure 4.7 African Trade Agreements
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Mercosur (Mercosul)
• Mercosur (Mercosul)
– Created in 1991 by the Treaty of Asuncion
– Economic free trade area in South America
modeled on the EU (Figure 4.8)
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Figure 4.8 Regional Trade Agreements in
Central America and South America
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Other Regional Agreements
• Central American Free • ASIA-Pacific
Trade Agreement
Economic
(CAFTA)
Cooperation
– FTA among the United
States and several
Central American
nations (Figure 4.8)
• Andean Community
(CAN)
– Serves as a regional
vehicle for promoting
open trade and
practical economic
cooperation
– South American fivenation trading bloc
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The European Union (EU)
• European Union
– A body of 25 European countries dedicated
to economic and political integration
(Figure 4.9)
– Romania and Bulgaria join in 2007, to move
membership to 27
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Figure 4.9 European Union: MemberNations and Candidate Nations
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Institutions of The EU
• European Parliament
– EU legislative body
whose members are
popularly elected from
member-nations
• Council of the
European Union
– Group that is the EU’s
primary policy-setting
institution
• European
Commission
– Institution that runs the
EU’s day-to-day
operations
• European Court of
Justice (ECJ)
– Court that rules on
issues related to EU
policies
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European Monetary Union (EMU)
• European Monetary Union
– Group that established use of euro in the
12-country euro zone
– The three countries from “old EU” that do
not participate are Denmark, Sweden, and
the United Kingdom
– Slovenia joins in 2007
– The single currency reduces the cost of
doing business across EMU country borders
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