國(guó)際經(jīng)濟(jì)學(xué)英文版章節(jié)課件Chap008

1、8,Regional Trading Arrangements,Introduction,Considered the second approach to trade liberalization A small group of nations, typically on a regional basis, form an arrangement Lower barriers while trading with member nations Preferential treatment for group members,Regional Integration Versus Multi

2、lateralism,Regional trading arrangements Trade barriers reduced only for a small group of partner nations Multilateral liberalization (WTO) Trade liberalization extended to all WTO members, on a nondiscriminatory basis Regional trading blocs can complement multilateral trading system,Limitations of

3、Regional Integration Versus Multilateralism,Discriminatory; a departure from the principle of normal trading relations, a cornerstone of the WTO system Can act as stumbling blocks to multilateralism Factors suggesting members non-interest in worldwide liberalization: May not realize additional econo

4、mies of scale from global trade liberalization May want to invest time and energy in establishing strong regional linkages,Advantages of Regional Integration Versus Multilateralism,Ways that foster global market opening: Can achieve deeper economic integration among members than multilateral accords

5、 Establishment of a regional free-trade area sets in place a self-reinforcing process Attractive for nonmembers to join and receive trade preferences Encourages partial adjustment of workers out of import-competing industries and into exporting industries based on comparative advantages,Types of Reg

6、ional Trading Arrangements,Free-trade area Customs union Common market Example: European Union (EU) Economic union Would include the dimension of a monetary union,Impetus for Regionalism,Allows economies of large-scale production Fosters specialization and learning-by-doing Attracts foreign investme

7、nt Fosters a variety of noneconomic objectives Managing immigration flows Promoting regional security Enhances and solidifies domestic economic reforms Smaller nations may seek safe-haven trading arrangements with larger nations,Effects of a Regional Trading Arrangement,Static effects of economic in

8、tegration On productive efficiency and consumer welfare Dynamic effects of economic integration Relates to member nations long-run rates of growth,Static Effects,Static welfare effects of a customs union (Figure 8.1) Movement toward freer trade under a customs union affects world welfare in two oppo

9、sing ways: A welfare-increasing trade-creation effect Consumption effect Production effect A welfare-reducing trade-diversion effect Generally implies a welfare loss,Back,Did Britain Gain from Entering the European Union?,In joining the EU: Britain had to comply with its agriculture policy Tariffs a

10、nd quotas increased price of non-EU produce to British consumers British consumers paid a high price for the change Britain lost because trade was diverted from a low- to high-cost producer Manufactured goods from Europe increased significantly Abolished barriers placed on imports of these goods fro

11、m European nations,Dynamic Effects,Dynamic gains Stem from the creation of larger markets by the movement to freer trade under customs unions Include: Economies of scale, greater competition, and a stimulus of investment Noticeable result: Market enlargement Broader markets may promote greater compe

12、tition among producers Can accelerate pace of technical advance and boost level of productivity,European Union (EU),European Community; created by the Treaty of Rome in 1957 Initially consisted of six nations Other countries joined the union between 1973 to 2004; total membership increased to 25 cou

13、ntries Opportunity to promote stability and further integration of the continent by peaceful means Expansion will produce both winners and losers,Pursuing Economic Integration: EU,Studies conducted on the overall impact of the EU on its members welfare (1960s and 1970s) Study conclusion on static we

14、lfare benefits: Trade creation: Pronounced in machinery, transportation equipment, chemicals, and fuels Trade diversion: Apparent in agricultural commodities and raw materials Trade creation exceeds trade diversion by a wide margin Dynamic benefits: Additional competition, investment, and economies

15、of scale,Pursuing Economic Integration: EU,1985: EU became a common market, resulting in: Elimination of remaining nontariff trade barriers to intra-EU transactions by 1992 Process of replacing central banks with a European Central Bank Replacing national currencies with a single Euro The Maastricht

16、 Treaty (signed in 1991) European Monetary Union (EMU) (2002) emerged with a single currency, known as the euro,Continued,Pursuing Economic Integration: EU,Convergence: European nations aligned economic and monetary policies Convergence criteria mandated by the Maastricht Treaty: Price stability Low

17、 long-term interest rates Stable exchange rates Sound public finances Important motivation for the EMU: Momentum it provides for political union,Continued,French and Dutch Voters Sidetrack Integration,New constitutional treaty finalized in 2004 that contained changes to the EUs original governing co

18、nstitution Constitutions future questionable following rejection by French and Dutch voters in separate referenda in 2005 Experts predict that EU may face a period of stagnation,Agricultural Policy,Substantial elements of this policy: Support of prices received by farmers for their produce Through s

19、chemes involving deficiency payments, output controls, and direct income payments Supported EU farm prices through a system of variable levies Exports of any surplus quantities of EU produce have been assured through the adoption of export subsidies,Agricultural Policy,Operation of a system of varia

20、ble levies and export subsidies (Figure 8.2) Variable levy More restrictive than a fixed tariff Discourages foreign producers from absorbing part of the tariff and cutting prices to maintain export sales Export subsidy Ensures that any surplus agricultural output will be sold overseas Government sup

21、port for agriculture (Table 8.1),Continued,Back,Back,Government Procurement Policies,Used by EU nations to support national and regional firms and industries for several reasons: National security Compensation for local communities near environmentally damaging public industries Support for emerging

22、 high-tech industries Politics,Government Procurement Policies,Sources for savings: Static trade effect: Purchases from the cheapest foreign suppliers Competition effect: Domestic suppliers decreased prices to compete with foreign competitors Restructuring effect: Restructuring of industries over th

23、e long run; surviving companies achieve economies of scale Opening up of government procurement (Figure 8.3),Continued,Back,Is the European Union Really a Common Market?,EU members have advanced to higher levels of economic unification Regulatory differences remain, creating barriers to trade and in

24、vestment stifling economic growth Examples: Kellogg Co. Caterpillar Inc. Ikea Group,Economic Costs and Benefits of a Common Currency,European Monetary Union (EMU) Lowers the costs of goods and services Facilitate a comparison of prices within the EU Promotes more uniform prices,Euro Gained in Value,

25、When Italy adopted the euro as its currency: Gave up option of changing its exchange rate to improve competitiveness of its exporters Effects of euro strengthening against the dollar: Italian firms lost competitiveness in U.S. markets Realization of the downside of joining the euro club,Optimum Curr

26、ency Area,A region that has a single official currency Advantages and disadvantages (Table 8.2) Various reactions to economic shocks: Mobility of labor Flexibility of prices and wages Automatic mechanism for transferring fiscal resources to the affected country To improve success chances, countries

27、should have: Similar business cycles Similar economic structures Affect all the participating countries in the same manner,Back,Europe as a Suboptimal Currency Area,Advantages of forming a EMU: Improves economic efficiency Facilitates genuine comparison of prices Elimination of exchange-rate risk St

28、imulates competition Facilitates broadening and deepening of financial markets Disadvantage of the EMU: Loss in use of monetary policy and exchange rate as a tool in adjusting to economic disturbances,Challenges for the EMU,Difficulty in determining interest rates due to wide difference in economic

29、growth rates among EMU countries Avoidance of excessive budget deficits Structural reform in European countries,North American Free Trade Agreement (NAFTA),Came into effect in 1994: Aim: Help Mexico develop as part of an integrated North America Main goal: Provide each member nation better access to

30、 the others markets, technology, labor, and expertise Main concerns: Canada and the U.S. had little to gain from trade liberalization with Mexico Likely gains and losses (Table 8.3),Back,NAFTAs Benefits and Costs for Mexico and Canada,Mexico Gains higher in comparison to U.S. and Canada Increases in

31、 production of goods and services for which Mexico has a comparative advantage Rising investment has helped: Increase wage incomes and employment, national output, and foreign exchange earnings Facilitated the transfer of technology Benefits to Canada of Abolishing U.S. Trade Restrictions (Figure 8.

32、4),Back,NAFTAs Benefits and Costs for the U.S.,Benefits of the U.S. economy overall: Expanding trade opportunities Reducing prices Increasing competition Enhancing the ability of U.S. firms to attain economies of large-scale production Economic gains for the U.S. estimated to be modest, because of s

33、ize of U.S. economy,Limitation of NAFTA for the United States,Affected segments of the U.S. economy Industries that rely on trade barriers to limit imports of low-priced goods (citrus-growing and sugar) Affects unskilled workers; jobs vulnerable to competition from low-paid workers abroad Mexicos en

34、vironmental regulations criticized as being less stringent compared to U.S. GDP, employment, and labor productivity (Table 8.4),Back,Effects of NAFTA,Making NAFTA more agreeable Regarding environment and labor: Establishing an agency to investigate abuses Fines or trade sanctions levied or imposed o

35、n countries that fail to enforce: Environmental laws Minimum-wage standards Child-labor laws Worker-safety rules Effects of NAFTA on the U.S. economy (Table 8.5),Back,Supreme Court Justices Let Mexican Trucks Roll In,U.S., Mexico, and Canada agreed to open their roads to each other according to NAFT

36、A 1995: Imposition of restrictions on Mexican trucks, confining them to stateside areas due to safety concerns Violated NAFTA agreement 2004: U.S. Supreme Court ruled that Mexican trucks have unrestricted access to American highways,Is NAFTA an Optimum Currency Area?,Greater linkages between countri

37、es will enable adoption of a single currency Sources of linkages: Degree of economic integration among members Similarity of economic structures among the members Analysts view: Mexican participation in North American optimum currency area questionable on economic grounds,Free Trade Area of the Amer

38、icas (FTAA),Idea for the establishment of FTAA dates back to the 1820s Conceived by Henry Clay Reason: Strengthening U.S. ties with new Latin republics If established, an FTAA would represent the largest trading bloc in the world,Open Trade Policies: Latin America,Economic-policy shifts that paved w

39、ay: Greater reliance on markets, private ownership, and deregulation Use of conventional and restrictive macroeconomic policies to promote economic growth and stability Failure of the import-substitution model of development of the 1960s and 1970s Major regional trade agreements that exist throughou

40、t the Americas (Table 8.6),Back,Challenges Facing the Establishment of FTAA,FTAAs allowance for other trade agreements in the hemisphere Special assistance to smaller partners in the hemisphere Agriculture makes up 7 percent of Latin Americas GDP and a larger share of its exports,Asia-Pacific Econom

41、ic Cooperation (APEC),U.S. is a member since 1989 Vision (1993): Elimination of barriers to trade and investment by the year 2020 Pace of implementation would take into account the differing levels of economic development among APEC economies Status: Remains to be seen whether the APEC goal of econo

42、mic integration will be achieved,Transition Economies,Involves nations making the transition from a centrally planned economy to a market economy Gross national income per capita for the transition economies as of 2004 (Table 8.7) Major features of these economic systems: Market economy: Commercial decisions of independent buyers and sellers govern both domestic and international trade Nonmarket economy: State planning and control govern foreign and sometimes domestic trade,Back,Transition Toward a Market-