Transcript Slide 1
Section Two
Cooperation Among Nations
International Business
by Ball, McCulloch, Frantz,
Geringer, and Minor
This chapter covers:
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•The influence of
international
institutions
•The structure of the
United Nations
The Dynamics of
International Institutions
•The importance of
the WTO
•The European Union
and NAFTA
•OECD
•OPEC
•Economic Integration
•Regional Trade
Agreements
International Business
by Ball, McCulloch, Frantz,
Geringer, and Minor
McGraw-Hill/Irwin
Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 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
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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The United Nations (UN)
The UN is possibly the bestknown worldwide
organization
Established at the end of
WWII
Mission peacekeeping
Created many
international entities
around the world
Highly decentralized
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United Nations Bodies
UN work carried out through five main
bodies
The General Assembly
The Security Council
The Economic and Social Council
The International Court of Justice
The Secretariat
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The General Assembly
All UN member-nations are members of the
General Assembly
Each nation has one vote regardless of its size,
wealth, or power
General assembly decisions have no legally
binding force for governments or citizens
UN charter was signed in San Francisco,
California in 1945
Today there are 191 members
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U.N. Security Council
Composed of 15 members
Insert Figure
UN SC in
session
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5 permanent and 10
chosen members
The 5 permanent
members include the
People’s Republic of
China, France, Russia, the
United Kingdom, and the
United States.
Each permanent member
has the power to veto any
measure.
Economic and Social Council
Concerned with economic problems including
trade, transport, industrialization, economic
development, and social issues
Makes recommendations on how to improve
education and health conditions
Promotes respect for and observation of human
rights and freedoms of people everywhere
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International Court of Justice
Also called the “World
Court”
Only nations may be
parties to litigation before
the “World Court”
The International Court of
Justice has 15 judges who
must come from 15 different
countries
Judges serve nine-year
terms
Secretariat
Carries out day-to-day administrative
functions
Headquartered in New York City
Services the other principle UN organs
Administers the UN’s programs and policies
Current Secretary-General Kofi A. Anna
Received Nobel Peace Prize December 2001
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History of Global International Trade
GATT 1947-1995
Established in 1947,
negotiations are
conducted in “rounds”
1947 to 1986, eight
“rounds” have taken
place
Uruguay Round highly
successful
January 1, 1995, the WTO
replaced GATT
World Trade
Organization
Designed to deal with
rules of trade between
nations
Currently 147 members
Headquarters Geneva,
Switzerland
Challenges
World Trade Agreements
Protests and
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demonstrations
Relies on goodwill
Organization for Economic
Cooperation and Development
OECD
Rich man’s club
30 wealthiest nations
Publishes extensive
research on
international business
and economic subjects
Members work to
coordinate domestic and
international policies
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Organization of Petroleum Exporting
Countries (OPEC)
Eleven member nations
Most members are in the Middle East
Iran, Iraq, Kuwait, Qatar, Saudi Arabia, the United Arab
Emirates
Three members are in Africa
Algeria, Libya, and Nigeria
Two members are elsewhere in the world
Indonesia and Venezuela
Non-OPEC oil producing countries
Mexico, Norway, Russia and the United Kingdom
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Economic and Political Integration
Free Trade Area
Tariffs are abolished among
members-countries
Each member-country
maintains its own external
tariffs on imports from
nonmember countries
Customs Union
A Free Trade Area where
member-countries add a
common external tariff
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Common Market
A Customs Union plus the
abolition of restrictions on
the mobility of capital and
labor among membercountries
Complete Economic
Integration
Involves a high degree of
political integration as
member-countries surrender
important elements of their
sovereignty
European Union
Background
Europe in shambles after
WWII
Marshall Plan
implemented by OEEC
1948 Benelux and
Western European Union
formed
1970’s UK, Ireland and
Denmark joined EU
1991 Maastricht Treaty
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European Union
A supernatural entity, meaning that it is a regional
government
In order to join the EU, member-nations give a
certain amount of their sovereignty to the EU
“Fortress Europe”
Currently 25 members
Ten new members in 2004
The largest import and export market in the world
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Institutions of the EU
European Commission
Guardian of the
Treaty
Brussels, Belgium
Council of Ministers
Policy-setting
institution
Representative from
each country
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Parliament of the EU
Elected by popular
vote every 5 years
Strasbourg, France
732 members
European Court of
Justice
Decides Treaty of
Rome cases
EU Problems
Cannot agree on system
of power
Presence and expense
of fraud
Financial scandal at
Eurostat 2003
Low voter turnout
Disagreement on
constitution
EU regulations impact
US because of size
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The European Monetary Union (EMU)
Twelve EU nations currently participate in the EMU
The 12 participating member-nations make up
an area often called the “euro zone”
The three countries that do not participate are
Denmark, Sweden, and the United Kingdom
The EMU created a new currency, the euro,
which became the official currency of the euro
zone countries on January 1, 1999
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Sources of FDI in the US by Region
North American Free Trade Agreement
Established on January 1, 1994
Created a free trade area among
Canada, Mexico, and the United
States
Purpose is to eliminate trade
barriers among the three
countries, creating a free trade
area
Import duties have been
eliminated or reduced
among the three countries
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Other Regional Groupings
Association of Southeast
Asian Nations (ASEAN)
Created in 1967
Brunei, Cambodia,
Indonesia, Laos,
Malaysia, Philippines,
Singapore, Thailand,
Vietnam
European Free Trade
Association (EFTA)
Created in 1960
Most now members of EU
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African Trade Agreements
Economic Community of
West African States
Common Market for
Eastern and Southern
Africa
Southern African
Development
Community
The African Union
Central American Free Trade
Agreement
Other Regional Agreements
Organization of American States
An organization of 35 countries formed in 1948 in the
Western Hemisphere, dedicated to promoting
cooperation in the region
Asia-Pacific Economic Cooperation
Established in 1989 in response to the growing response
of the economies of Pacific Rim countries
Mercosur
Created in 1991, this economic FTA consists of
Argentina, Brazil, Paraguay, and Uruguay
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Principle Offices of U.N.
U.N. President
H.E. Mr. Julian Robert
Hunte, President of the fiftyeighth session of the United
Nations General Assembly,
is Minister for External
Affairs, International Trade
and Civil Aviation of Saint
Lucia, a Senator and
Member of Parliament, a
Justice of the Peace and a
business executive
WTO Facts
Location: Geneva,
Switzerland
Established: 1 January 1995
Created by: Uruguay Round
negotiations (1986-94)
Membership: 147 countries
(on 23 April 2004)
Budget: 162 million Swiss
francs for 2004
Secretariat staff: 600
Head: Supachai
Panitchpakdi (directorgeneral
Functions:
Administering WTO
trade agreements
Forum for trade
negotiations
Handling trade disputes
Monitoring national trade
policies
Technical assistance and
training for developing
countries
Cooperation with other
international
organizations
Regional Trade Agreements
The vast majority of WTO members are party to one
or more regional trade agreements. The surge in
RTAs has continued unabated since the early 1990s.
Some 250 RTAs have been notified to the
GATT/WTO up to December 2002, of which
130 were notified after January 1995. Over 170 RTAs
are currently in force; an additional 70 are estimated
to be operational although not yet notified. By the
end of 2005, if RTAs reportedly planned or already
under negotiation are concluded, the total number
of RTAs in force might well approach 300.
Top 10 States for EU Foreign Direct
Investment 2001
State
Investment,
USD billion
Texas
67.3
California
57.0
Michigan
38.8
New York
36.5
Illinois
26.4
Pennsylvania
24.5
New Jersey
20.7
Ohio
18.7
Louisiana
18.5
Indiana
18.4
Top 10 States Exporting to European Union,
2002
Total value,
USD billion
% 2001-02
California
18.58
-18.5
New York
9.5
-12.9
Texas
9.46
-11.6
Washington
7.89
-9.3
Massachusetts
6.47
-8.9
Illinois
6.02
-8.8
New Jersey
5.08
-13.9
State
Source: U.S. Census Bureau, Foreign Trade Division/ MISER 2002. Figures are for 2002.
Ohio
4.65
-10.6
Office of NAFTA and Inter-American
Affairs
Our Mission
One of the primary objectives of the Office of NAFTA and
Inter-American Affairs (ONIA) is to increase access to foreign
markets for U.S. exports, through the elimination of tariff and
non- tariff barriers to trade. Our approach is three-fold:
heavily contribute to the coordination and development of
U.S. trade policy in the Western Hemisphere for the
Department of Commerce.
advise the U.S. business community, policy-makers, and
Congress concerning market access to Canada and Mexico
under NAFTA, by providing accurate and timely
information.
assist U.S. companies experiencing problems gaining access
to Canadian and Mexican markets.
OECD Member Countries
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
OPEC