Post on 24-Dec-2015
Section TwoCooperation Among Nations
International Businessby Ball, McCulloch, Frantz,
Geringer, and Minor
4
The Dynamics ofThe Dynamics ofInternational InstitutionsInternational Institutions
International Businessby Ball, McCulloch, Frantz,
Geringer, and Minor McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
This chapter covers:
•The influence of international institutions
•The structure of the United Nations
•The importance of the WTO
•The European Union and NAFTA
•OECD
•OPEC
•Economic Integration
•Regional Trade Agreements
Chapter ObjectivesChapter Objectives
Understand the influence of international organizations
Discuss the structure and activities of the United Nations
Understand the World Trade OrganizationUnderstand the European Union, NAFTA and other
regional trade agreementsKnow about the Organization for Economic
Cooperation and DevelopmentDescribe the major purpose and effectiveness of OPECOutline the four major levels of economic integration
agreements
4-2
The United Nations (UN)The United Nations (UN)
The UN is possibly the best-known worldwide organization Established at the
end of WWII Mission peacekeeping Created many
international entities around the world
Highly decentralized
4-3
United Nations BodiesUnited 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
4-4
The General AssemblyThe 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 1945Today there are 191 members
4-5
U.N. Security CouncilU.N. Security Council
Composed of 15 members 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.
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Insert Figure UN SC in session
Economic and Social CouncilEconomic 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
4-7
International Court of JusticeInternational 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
SecretariatSecretariat
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
4-9
History of Global International TradeHistory 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 OrganizationDesigned to deal with
rules of trade between nations
Currently 147 members
Headquarters Geneva, Switzerland
Challenges World Trade
Agreements Protests and
demonstrations Relies on goodwill4-10
Organization for EconomicOrganization for EconomicCooperation and DevelopmentCooperation 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 policies4-11
Organization of Petroleum Exporting Organization of Petroleum Exporting
Countries (OPECCountries (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
4-12
Economic and Political IntegrationEconomic 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
Common Market A Customs Union plus
the abolition of restrictions on the mobility of capital and labor among member-countries
Complete Economic Integration Involves a high degree
of political integration as member-countries surrender important elements of their sovereignty4-13
European UnionEuropean 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
4-14
European UnionEuropean 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 EUInstitutions of the EU
European Commission Guardian of the
Treaty Brussels, Belgium
Council of Ministers Policy-setting
institution Representative
from each country
Parliament of the EU Elected by popular
vote every 5 years Strasbourg,
France 732 members
European Court of Justice Decides Treaty of
Rome cases
4-16
EU ProblemsEU 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
4-17
The European Monetary Union (EMU)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 RegionSources of FDI in the US by Region
North American Free Trade AgreementNorth 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
4-20
Other Regional GroupingsOther 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
EU4-21
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 AgreementsOther 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
4-22
Principle Offices of U.N.Principle Offices of U.N.
U.N. PresidentU.N. President
H.E. Mr. Julian Robert Hunte, President of the fifty-eighth 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 FactsWTO 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 (director-general
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 AgreementsRegional 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 Top 10 States for EU Foreign Direct Investment 2001Investment 2001
StateInvestment,
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, Top 10 States Exporting to European Union, 20022002
StateTotal 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
Ohio 4.65 -10.6
Michigan 4.27 -0.7
Pennsylvania 3.71 -19.3Source: U.S. Census Bureau, Foreign Trade Division/ MISER 2002. Figures are for 2002.
Office of NAFTA and Inter-American Office of NAFTA and Inter-American AffairsAffairs
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 CountriesOECD Member Countries
AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkFinlandFranceGermanyGreeceHungaryIcelandIrelandItalyJapanKorea
LuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandTurkeyUnited KingdomUnited States
OPECOPEC