Académique Documents
Professionnel Documents
Culture Documents
CROSS-NATIONAL COOPERATION
AND AGREEMENTS
OBJECTIVES
To identify the major characteristics and challenges of the World Trade Organization
To discuss the pros and cons of global, bilateral, and regional integration
To describe the static and dynamic impact of trade agreements on trade and
investment flows
To define different forms of regional economic integration
To compare and contrast different regional trading groups, including but exclusively
the European Union (EU), the North American Free Trade Agreement (NAFTA), the
Southern Common Market (MERCOSUR), and the Association of Southeast Asian
Nations (ASEAN)
To describe other forms of global cooperation, such as the United Nations and the
Organization of Petroleum Exporting Countries (OPEC)
CHAPTER OVERVIEW
CHAPTER OUTLINE
I. INTRODUCTION
Trading groups are a significant influence on the strategies of MNEs because they
define the size of regional markets and the rules by which companies must operate.
Economic integration is the political and economic agreements among countries
that give preference to member countries in the agreement. Approaches to economic
integration include global integration via the World Trade Organization, bilateral
POINT: The Central American Free Trade Agreement (CAFTA) will link the United
States with five countries in Central America plus the Dominican Republic in the
Caribbean via a free trade agreement. It will open the door for increased trade between
the United States and the region, and it will stimulate economic growth in Central
America by encouraging foreign direct investment, offering shorter international supply
chains, and encouraging political reform in an area historically plagued by dictatorships
and civil wars. Further, the growth that CAFTA will foster in Central American
industries will directly benefit those U.S. exporters whose products are used in their
production processes.
COUNTERPOINT: CAFTA is not a good idea because of the vastly different interests
among countries. Opening the market wont help U.S. agriculture, which actually needs
an increase in world market prices; Central American economies are too small to affect
prices. Further, given its balance of payments deficit, the United States cant tolerate
many more imports. CAFTA is also a bad move for labor and workers rights because it
will trigger the loss of manufacturing jobs in the United States and the loss of agricultural
jobs in Central America. Finally, stringent intellectual property clauses included in the
agreement threaten access to affordable life-saving medicine in the Central American
nations.
Although the objective of the WTO is to reduce barriers to trade in goods, services, and
investment, regional groups do that and more. Regional economic integration deals with
the specific problems facing member countries, while the WTO concerns itself with trade
issues facing the world as a whole. As a result, regional integration, which is more
flexible, may help the WTO achieve its objectives as the process leads to the
liberalization of issues not covered by the WTO. Regional economic integration can also
3. The Downside of High Prices. Keeping prices high has a downside for
OPEC. Higher prices encourage exploration outside of OPEC member
countries and can cause a global economic slowdown, thus lowering the
overall demand for oil.