MGT 302 EXAM 2 QUESTIONS AND ANSWERS

MGT 302 EXAM 2 QUESTIONS AND ANSWERS Chapter 9 Regional Economic Integration agreements among countries in a geographic location to reduce, and ultimately remove, tariff and non-tariff to free flow of g/s/FOP between each other. WTO members are required to _______ the WTO of all trade agreements in which they participate. notify Regional Economic Integration Helps to reduce trade barriers more quickly. Ex: The EU (European Union) European Union Created in Jan 1993; 1 single market with 340 million consumers. The EU is larger than the US in __________ terms. economic Countries that use NAFTA: US, Mexico, Canada NAFTA Ultimately, this aims to remove all barriers to the free flow of g/s between the US/Mexico/Canada. Most economists argue that the _______ of greater regional trade ________ any costs. benefits/outweigh Fears of Regional Economic Integration That it will lead to a world that competes in trade blocs (trade will exist within each bloc, but it will be protected from outside competition with high tariffs) Free Trade Area All barriers to the trade of g/s are removed Free trade agreements are the most popular form of: Regional economic integration (90%) Levels of Economic Integration (Largest level of integration) Free trade --> Customs Union --> Common Market --> Economic Union --> Political Union (Smallest level of integration) European Free Trade Association (EFTA) Norway, Iceland, Litchensutein, and Switzerland, the 4 countries who initially decided to not be part of the EU. The emphasis of EFTA is free trade on industrial goods. Agriculture was NOT included in agreement. Customs Union Eliminates trade barriers between member countries and establishes a common external trade policy. Ex: The EU BEGAN as a customs union, but it has now moved beyond this stage. Economic Union Free flow of products and FOP among member countries and the adoption of a common external trade policy. Note: this must include a common currency, harmonization of members' tax rates, and common monetary/fiscal policy. Ex: EU Political Union Central political apparatus coordinates the economic, social, and foreign policy of member states. Ex: EU is on the road to being at least a partial political union Economic theories suggest that free trade and investment is a... positive-sum game Positive-Sum game all countries stand to gain it is