Regional Economic Integration

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  • 1. Assignment on Regional economic integration ASIA, USA, EU Submitted by: S M Ruhan Submitted to: ID: 2011110000171 Lecturer Program: BBA School of Business Studies Batch: 28th )
  • 2. Table of Content Page No. Details 1. Cover Page 2. Table of content 3. Executive Summary 4. Introduction 5-8 The European Union Model, The State of the Union, Year Of Established, Objectives of the European Union 9-13 The Fundamental Principles, Rights, List of countries, Current scenario 14-17 FTAs, APEC, ASEAN, SAFTA, The global and regional political context, Current scenario 18-21 NAFTA, Objectives, Member countries 22-23 Objectives Of SICA, Year of Established, Members countries, Functions 24 Conclusion and References
  • 3. Executive Summary South Asia is the most malintegrated region in the world. And east and south Asia are much less integrated in finance than they are in trade and FDI – due to highly restrictive national policies governing financial markets. Asia’s existing FTAs are “trade light”. They are largely limited to tariff cuts, but have barely tackled non-tariff regulatory barriers in goods, services and investment, and are be devilled by complex rules of origin requirements. Asian regional institutions can be useful at the margin. They can be “chat forums” for policy dialogue and exchange of information, gradually improve mutual surveillance and transparency, promote trade facilitation and “best-practice” measures, and (at best) cement unilateral liberalization and help to prevent its reversal in difficult times. But more ambitious regional initiatives are inadvisable, indeed unachievable. Better, therefore, to be pragmatic and realistic – and stick to terra firma. Asia’s existing FTAs are “trade light”. They are largely limited to tariff cuts, but have barely tackled non-tariff regulatory barriers in goods, services and investment, and are be devilled by complex rules of origin requirements. Asian regional integration is not likely to come about through top-down regional policy initiatives. The key to future regional and global integration is renewed unilateral, non- discriminatory liberalization, this time going beyond border barriers to tackle behind-the- border regulatory barriers. That, more than anything else, would extend multinationals’ supply chains in the region, and open up regional markets for domestic producers and consumers An APEC FTA initiative has gone nowhere – entirely predictable given such a large, het- erogeneous grouping. An east-Asian or a pan-Asian FTA, by discriminating against third countries, would compromise regional production networks linked to global supply chains. Moreover, huge economic gaps and enduring political differences will stymie Asian regional integration for some time to come. As for regional monetary and financial cooperation, it is embryonic, very soft and confined to East Asia.
  • 4. Introduction While the European Union (EU) has long been the most developed model of regional integration, it was severely shaken by the recent economic crisis, causing increasing doubts about the integration process. The lack of a timely and coherent response to the euro crisis called into question the integrity of the euro zone, whose structural and institutional fault lines have been revealed by the financial crisis. These doubts coincide with dramatic changes in the global economic order involving the relative decline of the EU and United States and the rise of Asia. The likely economic adjustments are already threatening social cohesion and political stability in Europe. The crisis has temporarily weakened the EU's status as a model for regional integration, but as the EU recovers its confidence, as it always has after previous crises, it will continue to be the leading example for other efforts at regional integration. Past efforts at regional integration have often focused on removing barriers to free trade in the region, increasing the free movement of people, labor, goods, and capital across national borders, reducing the possibility of regional armed conflict (for example, through Confidence and Security-Building Measures), and adopting cohesive regional stances on policy issues, such as the environment, climate change and migration.
  • 5. The European Union Model Since the early 1950s, the EU has been a pioneer in regional integration. The most important principles underlying the success of the EU project include: – Visionary politicians, such as Robert Schuman of France and Konrad Adenauer of Germany, who conceived of a new form of politics based on the supranational "community method" rather than the traditional balance-of-power model. Support from the United States was also crucial in the early years. – Leadership generated by the Franco-German axis. Despite many problems, Paris and Berlin have been and remain the driving force behind European integration. – The political will to share sovereignty and construct strong, legally based, common institutions to oversee the integration project. – A consensus approach combined with solidarity and tolerance. The EU approach is based on not isolating any member state if they have a major problem (such as Greece in the most recent crisis), hesitance to move forward with policies until the vast majority of member states are ready, and a willingness to provide significant financial transfers to help poorer member states catch up with the norm. These four tenets have guided the EU well over the years and enabled the institutions to survive many crises, from French president Charles de Gaulle's "empty chair" tactic of withdrawing French representatives from EU political bodies in protest of moves to introduce qualified majority voting (QMV) to failed referendums on new treaties in a number of member states, including rejection of the Constitutional Treaty by France and the Netherlands in 2005 and the Lisbon Treaty by Ireland in 2008. More recently, the EU has adopted a more flexible approach resulting in a multi-speed Europe with several tiers of integration. For example, not all member states are in the eurozone, or in the Schengen passport-free zone; this arrangement has allowed some of the more Euro-skeptic countries such as the United Kingdom to opt out of certain obligations. Nevertheless, the core tenet of the EU is readiness to share sovereignty and operate through strong common institutions
  • 6. The State of the Union Compared to most other regions of the world, the EU is a haven of peace, prosperity, and security. Following the global economic crisis, however, there are several major challenges facing the EU that, if not tackled with urgency and determination, could threaten the entire European project. Namely, the EU has grown and integrated rapidly without commensurate strengthening of its political and economic institutions. The emerging gap between necessary coordination and institutional capacity in the EU suggests a lesson for other regional groupings if and when they arrive at later stages of the integration process. The first challenge is increased fiscal coordination amid a worsening economic outlook. The EU needs to cleanse the financial system and follow through on austerity measures introduced by almost all member states. The situation in late summer 2010 is less critical than it appeared in the spring, when many doomsayers were predicting the collapse of the euro and even suggesting the EU might break up. The major risk today is the continuing fragility of the economies of some euro zone member states such as Greece, Spain, and Portugal, and the possibility of renewed speculation in the financial markets. Although there are some positive signs of economic recovery in Europe, many economists continue to warn of a possible "double dip" recession and the likely impact of the ongoing problems of many European banks. While most passed the "stress tests" at the end of July 2010, there was broad agreement that these tests were not as strenuous as they could have been. The European Union (EU) is an economic and political union of 28 member states that are located primarily in Europe. The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states.[14][15] Institutions of the EU include the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union, the European Central Bank, the Court of Auditors, and the European Parliament. The European Parliament is elected every five years by EU citizens. The EU traces its origins from the European Coal and Steel Community (ECSC) and the European Economic Community (EEC), formed by the Inner Six countries in 1951 and 1958, respectively. In the intervening years the community and its successors have grown in size by the accession of new member states and in power by the addition of policy areas to its remit. The Maastricht Treaty established the European Union under its current name in 1993. The latest major amendment to the constitutional basis of the EU, the Treaty of Lisbon, came into force in 2009. The EU has developed a single market through a standardised system of laws that apply in all member states. Within the Schengen Area (which includes 22 EU and 4 non-EU states) passport controls have been abolished. EU policies aim to ensure the free movement of people, goods, services, and capital, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development.
  • 7. Year Of Established: The following visionary leaders inspired the creation of the European Union we live in today. Without their energy and motivation we would not be living in the sphere of peace and stability that we take for granted. From resistance fighters to lawyers, the founding fathers were a diverse group of people who held the same ideals: a peaceful, united and prosperous Europe. Beyond the founding fathers described below, many others have worked tirelessly towards and inspired the European project. This section on the founding fathers is therefore a work in progress. The Objectives of the European Union The European Treaty was put in place with a host of major objectives. Each objective is designed to improve quality of life throughout Europe. There is also a section on foreign policy and what the Union hopes to achieve throughout the world. The European Union uses it’s objectives to help guide the union and put necessary practices into place. You can continue reading to find out more. The main objectives of the European Union is to promote peace, along with ensuring it’s people’s well-being and maintaining the values of the Union. Major Objectives Included in Union The Union works hard to follow it’s objectives including freedom and security with justice for all residents. They work to ensure a free and undistorted competition and a sustainable development through price stability and economic growth. Finding information about the Union`s easy on line, do a search the same as you would for Scottish Trust Deed or st. louis real estate. Other major objectives of the union include ensuring full employment, improving environmental quality and technological advancement. They work to fight discrimination, promote social justice and child protection rights. You can think of the European Union as a muscle maximizer as they safeguard cultural heritage throughout the European areas while working hard to achieve their objectives.
  • 8. Foreign Objectives When putting the European Treaty in place the objectives were not solely dedicated to Europe, they worked hard on a foreign policy as well, which is worked at on a daily basis. Their foreign policy ensures fair trade. They want to eradicate poverty throughout the world while protecting human rights. They want to develop an international law, a sustainable environment and a sustainable development between countries while promoting peace. This policy has not just been written down on a piece of paper and have lab rats following the rules. These are thought out to not only promote the well-being of people residing within Europe, but enable these people to work with other countries whether it’s through trade or working to improve the quality of life in suffering areas. If you go on line and search for torn hill or Qui bids, chances are you won’t find anything about the European Unions objectives there, but they do play a part, through these sites they offer free trade and fair trade throughout the world. Moving Forward Many countries are happy working with the European Union as they work towards their objectives, using them as guidelines in the daily development of the area. Europe has close ties to America and other countries where they import and export goods, work together to develop suffering areas and form a sustainable environment ensuring our children have a safe place to grow up in the future. Through these European Union objectives, prime ministers and presidents are able to work together to develop the ideals that the Union is working towards. Through technological advancements the country will be able to enjoy a stable infrastructure where they can promote their stable prices and enjoy economic growth. ( http://www.jidtunisie.net/2012/09/the-major-objectives-of-the-european-union/ )
  • 9. THE VALUES OF THE UNION The Union is founded on the values of respect for human dignity, liberty, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values, which are set out in Article I-2, are common to the Member States. Moreover, the societies of the Member States are characterized by pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men. These values play an important role, especially in two specific cases. Firstly, under the procedure for accession set out in Article I-58, any European State wishing to become a member of the Union must respect these values in order to be considered eligible for admission. Secondly, failure by a Member State to respect these values may lead to the suspension of that Member State's rights deriving from membership of the Union In comparison with the existing Treaties, the Constitution has included new values, notably human dignity, equality, the rights of minorities and the characterization of the values upheld by the societies of the Member States. THE FUNDAMENTAL PRINCIPLES Article I-4 of the Constitution guarantees the free movement of persons, goods, services and capital within the Union (the famous "four freedoms") and strictly prohibits any discrimination on grounds of nationality. As regards relations between the Union and the Member States, the Constitutional Treaty brings together the relevant provisions of the existing Treaties in Article I-5, in particular the obligation to respect the national identities and the fundamental political and constitutional structures of the Member States. The principle of loyal cooperation is also included in this Article. Article I-6 of the Constitutional Treaty is devoted to Union law. It lays down the principle of the primacy of the law of the European Union over the law of the Member States. This principle, which has been developed by the Court of Justice in its case-law, has long been recognised to be a basic principle and a key aspect of the functioning of the Union. The Constitution simply gives it a higher profile by incorporating it into a key part of the Treaty. Article I-7 confers on the European Union legal personality. Following the merger of the European Community and the European Union, the new Union will therefore have the right to conclude international agreements , in the same way as the European Community can today, but without compromising the division of competences between the Union and the Member States.
  • 10. THE SYMBOLS OF THE UNION Article I-8 lists the symbols of the Union: • the flag of the Union, which is a circle of twelve gold stars on a blue background; • the anthem of the Union, which is based on the 'Ode to Joy' from the Ninth Symphony by Ludwig van Beethoven; • the motto of the Union, which is 'United in diversity'; • the currency of the Union, which is the euro; • 9 May, which is celebrated throughout the Union as Europe Day, in memory of the 1950 declaration by Robert Schuman, who initiated the European integration project. The Constitution does not create new symbols. Rather, it takes the symbols that are already used by the EU and are familiar to ordinary citizens and gives them constitutional status. FUNDAMENTAL RIGHTS As regards the protection of fundamental rights, the Constitution makes significant advances. Article I-9 of the Constitutional Treaty reproduces the guarantee of fundamental rights provided in the EU Treaty and refers to the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) and to the constitutional traditions common to the Member States. This Article also opens the way for the Union to seek formal accession to the ECHR. Fundamental rights therefore form part of Union law as general principles. A protocol annexed to the Constitution provides that the accession of the Union to the ECHR must preserve the specific characteristics of the Union and Union law and not affect the specific situation of Member States in relation to the ECHR. Moreover, a declaration annexed to the Final Act of the Intergovernmental Conference (IGC) notes the existence of a regular dialogue between the Court of Justice of the European Union and the European Court of Human Rights, which could be reinforced when the Union accedes to that Convention. In addition, the Constitutional Treaty includes the Charter of Fundamental Rights, which was solemnly proclaimed at the Nice European Council in December 2000, in Part II of the Constitution. The European Union therefore acquires for itself a catalogue of fundamental rights which will be legally binding not only on the Union, its institutions, agencies and bodies, but also on the Member States as regards the implementation of Union law. The inclusion of the Charter in the Constitution does not compromise the division of competences between the Union and the Member States. The inclusion of the Charter in the Constitutional Treaty will make it more visible to all citizens, who will be better informed of their rights. The Charter also contains additional rights not contained in the European Convention for the Protection of Human Rights and Fundamental
  • 11. Freedoms, such as workers' social rights, data protection, bioethics or the right to good administration. A GROWING COMMUNITY – THE FIRST ENLARGEMENT (1970 – 1979) Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising the number of member states to nine. The short, yet brutal, Arab-Israeli war of October 1973 result in an energy crisis and economic problems in Europe. The last right-wing dictatorships in Europe come to an end with the overthrow of the Salazar regime in Portugal in 1974 and the death of General Franco of Spain in 1975. The EU regional policy starts to transfer huge sums to create jobs and infrastructure in poorer areas. The European Parliament increases its influence in EU affairs and in 1979 all citizens can, for the first time, elect their members directly. THE CHANGING FACE OF EUROPE - THE FALL OF THE BERLIN WALL (1980 – 1989) The Polish trade union, Solidarność, and its leader Lech Walesa, become household names across Europe and the world following the Gdansk shipyard strikes in the summer of 1980. In 1981, Greece becomes the 10th member of the EU and Spain and Portugal follow five years later. In 1986 the Single European Act is signed. This is a treaty which provides the basis for a vast six-year programme aimed at sorting out the problems with the free-flow of trade across EU borders and thus creates the ‘Single Market’. There is major political upheaval when, on 9 November 1989, the Berlin Wall is pulled down and the border between East and West Germany is opened for the first time in 28 years, this leads to the reunification of Germany when both East and West Germany are united in October 1990. A EUROPE WITHOUT FRONTIERS (1990 – 1999) With the collapse of communism across central and eastern Europe, Europeans become closer neighbours. In 1993 the Single Market is completed with the the 'four freedoms' of: movement of goods, services, people and money. The 1990s is also the decade of two treaties, the ‘Maastricht’ Treaty on European Union in 1993 and the Treaty of Amsterdam in 1999. People are concerned about how to protect the environment and also how Europeans can act together when it comes to security and defence matters. In 1995 the EU gains three more new members, Austria, Finland and Sweden. A small village in Luxembourg gives its name to the ‘Schengen’ agreements that gradually allow people to travel without having their passports checked at the borders. Millions of young people study in other countries with EU support. Communication is made easier as more and more people start using mobile phones and the internet. FURTHER EXPANSION (2000 – 2009)
  • 12. The euro is the new currency for many Europeans. 11 September 2001 becomes synonymous with the 'War on Terror' after hijacked airliners are flown into buildings in New York and Washington. EU countries begin to work much more closely together to fight crime. The political divisions between east and west Europe are finally declared healed when no fewer than 10 new countries join the EU in 2004, followed by two more in 2007. A financial crisis hits the global economy in September 2008, leading to closer economic cooperation between EU countries. The Treaty of Lisbon is ratified by all EU countries before entering into force on 1 December 2009. It provides the EU with modern institutions and more efficient working methods. A DECADE OF OPPORTUNITIES AND CHALLENGES (2010 – TODAY) The new decade starts with a severe economic crisis, but also with the hope that investments in new green and climate-friendly technologies and closer European cooperation will bring lasting growth and welfare. List of Countries - European Union (EU) 2013 Classification structure List of Countries - European Union (EU) 2013 - Classification structure Code Country Alpha-2 Alpha-3 040 Austria AT AUT 056 Belgium BE BEL 100 Bulgaria BG BGR 191 Croatia HR HRV 196 Cyprus CY CYP 203 Czech Republic CZ CZE 208 Denmark DK DNK 233 Estonia EE EST 246 Finland FI FIN 250 France FR FRA 276 Germany DE DEU 300 Greece GR GRC
  • 13. List of Countries - European Union (EU) 2013 - Classification structure Code Country Alpha-2 Alpha-3 348 Hungary HU HUN 372 Ireland, Republic of (EIRE) IE IRL 380 Italy IT ITA 428 Latvia LV LVA 440 Lithuania LT LTU 442 Luxembourg LU LUX 470 Malta MT MLT 528 Netherlands NL NLD 616 Poland PL POL 620 Portugal PT PRT 642 Romania RO ROU 703 Slovakia SK SVK 705 Slovenia SI SVN 724 Spain ES ESP 752 Sweden SE SWE 826 United Kingdom GB GBR Function of EU The overall function of the European Union is to create and implement laws and regulations that integrate the member states of the EU. The countries of the EU are supposed to have uniform laws and policies concerning a variety of things (like immigration, labor, weights and measures -- all sorts of things). The function of the EU government is to decide how this integration should be done and to carry it out. For example, 16 members of the EU use the Euro as their currency. One of the functions of a part of the EU government was to devise the currency -- to decide what it would be called what it would look like, etc. Another part of the EU government tries to get countries using the Euro to enact fiscal policies that will keep the Euro stable. They try, in other words, to prevent fiascos like what happened in Greece this past year and they try to remedy them if they happen.
  • 14. Current situation of EU The European Union is an economic and political partnership between 27 European countries that together cover a large part of the European continent. As the EU website explains: “It was created in the aftermath of the Second World War. The first steps were to foster economic cooperation: the idea being that countries who trade with one another become economically interdependent and so more likely to avoid conflict. The result was the European Economic Community (EEC), created in 1958, and initially increasing economic cooperation between six countries: Belgium, Germany, France, Italy, Luxembourg and the Netherlands. Since then, a huge single market has been created and continues to develop towards its full potential. But what began as a purely economic union has also evolved into an organisation spanning all policy areas, from development aid to environment. A name change from the EEC to the European Union (the EU) in 1993 reflected this change.” The Nobel Prize Committee recognised the achievements of the European Union by awarding the 2012 Peace Price to the project “for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe“. But in the shadow of the European debt crisis Europe appears less the united with Euroscepticism gaining momentum in some countries. A 2009 study by the European Commission “Portugal and Hungary (both 50%) and Latvia (51%) contain the fewest people who feel optimistic about the EU’s future. The UK (53%), Greece (54%) and France (57%) also record noticeably low figures” (see page 212 in the accompanying report). “Euroscepticism in the United Kingdom has been a significant element in British politics since the inception of the European Economic Community (EEC), the predecessor to the EU”, concludes a Wikipedia contribution, which reflects the emotional and often – in either way – dogmatic nature of the debate in the most skeptic members of the Union. The EU appears to have become a welcome recession scapegoat.But what is the European Union anyway. Rather than an alien construct imposed on the member states, it still is the agreed structure set up by its member states (for the good or bad, that is). The following series of maps gives a brief introduction into some of the key figures that shape the countries that are part of the EU and who are about the meet for negotiations on how to fund the European Union for the rest of the decade – having crucial implications on the role and purpose of the project. All maps shown here are cartograms based on national-level statistics. The first map is a population cartogram of the member states showing where how many people live (a more detailed perspective gives this gridded population cartogram of the EU) Asia FTAs
  • 15. In essence, Asia has played FTA catch-up with other regions. FTAs have proliferated like wildfire. By June 2009, East Asia plus India (the ADB’s “integrating Asia”) had concluded 54 FTAs, up from 3 in 2000. 40 FTAs are currently in effect, and another 78 are either under negotiation or proposed (Table 5). Most of these (74% of concluded FTAs) are bilateral FTAs rather than plurilateral or regional negotiations and agreements. Many – indeed the majority for China, India, Singapore and South Korea -- are with extra-regional partners.13 The major Asian players – China, India and Japan – are involved, as are South Korea, Australia, New Zealand, the ASEAN countries, as well as other south-Asian countries. The USA is involved with individual Asian countries, as are some Latin American countries and South Africa. The EU has FTA negotiations with South Korea, India and ASEAN. APEC APEC’s membership is diverse and unwieldy; its agenda has become impossibly broad and unfocused; its vaunted Open (i.e. non-discriminatory) Regionalism is dead in the water; and these days it is driven by shallow conferencitis and summitry. It cannot be expected to contribute Anything serious to regional economic integration. An APEC FTA initiative (FTAAP – Free Trade Area of the Asia Pacific) was launched at the APEC Hanoi Summit in 2006.17 It has gone nowhere: political and economic divisions in such a large, heterogeneous grouping are manifold and intractable. The best APEC can hope for is to encourage “best-practice” trade-related policies through research, mutual surveillance and exchange of information – akin to what the OECD does for its members. But even that may be too much to expect. ASEAN The ASEAN Free Trade Area (AFTA) has an accelerated timetable for intra-ASEAN tariff elimination, but seen little progress on “AFTA-plus” items such as services, investment, non- tariff barriers, and mutual recognition and harmonization of standards. An ASEAN Economic Community (AEC), a single market for goods, services, capital and the movement of skilled labor, with a fast track for “priority sectors”, is supposed to be achieved by 2015. A new ASEAN Charter gives the group a common legal personality. On the economic front, the Charter contains two new agreements, the ASEAN Trade in Goods Agreement (ATIGA) and the ASEAN Comprehensive Investment Agreement (ACIA). these integrate separate agreements into single consolidated legal texts on trade in goods and FDI respectively. The ASEAN Agreement in Services (AFAS) remains unchanged. Will these initiatives spur intra-regional integration and be a viable collective force in Asian and wider international relations? The track record indicates otherwise. AFTA is among the strongest Asian FTAs, but it is also trade-light. Its vaunted success is the Common Effective Preferential Tariff (CEPT): Intra-regional tariffs have come down close to zero in the old ASEAN members, with longer transition periods for the poorer new ASEAN members. But the CEPT is mostly a paper exercise: ASEAN countries’ tariffs have been coming down
  • 16. unilaterally in any case; and there has been minimal take-up of CEPT preferences by firms. ASEAN also has agreements on tackling non-tariff barriers and liberalizing services and investment, But these are very weak and have resulted in hardly any net liberalization. In sum, ASEAN economic integration has been limited to tariff cuts, but it has a pathetic record in tackling intra- regional regulatory barriers. SAFTA South Asia’s regional-integration initiatives are even weaker than in East Asia – not surprising given its abysmal record on intra-regional trade. South Asia’s strongest FTA is that between India and Sri Lanka. But this is actually weak, with carve-outs, tariff-rate quotas And stringent ROOs effectively excluding or restricting up to half of bilateral trade. The South Asian Association of Regional Cooperation (SAARC) was founded in 1985, and a South Asian Preferential Trade Area (SAPTA) became operational in 1995. The latter had limited product coverage. The South Asian Free Trade Area (SAFTA), operational since 2006, is supposed to be a full-fledged FTA by 2015. To date it is restricted to trade in goods. But tariff lines in members’ “sensitive lists” exclude just over half of intra-regional trade, in addition to very restrictive ROOs on products targeted for tariff reduction. Other NTBs make matters worse. For example, a “rule of destination” restricts entry of covered imports to specified Indian ports and land customs stations. Finally, trade between SAFTA’s two largest members, India and Pakistan, is minuscule. Bilateral trade is throttled because neither country effectively accords the other most-favored-nation (MFN) status. It is extraordinary that two countries with such a long shared border, and which, pre-independence, were a unified political-economic space, should have bilateral trade that amounts to less than 1 per cent of their total trade. Wider regional-integration initiatives: ASEAN Plus Three, ASEAN Plus Six, APC, TPP Lastly, there is much talk in the region of folding bilateral FTAs and collective ASEAN FTAs with third countries into larger, integrated FTAs that would cover East Asia, perhaps include south Asia, and even stretch across the Pacific. At the more modest end of the scale, the Trans- Pacific Strategic Economic Partnership Agreement is a four-way FTA (dubbed “P4”) that brings together Singapore, Brunei, New Zealand and Chile, all small, open econo¬mies with a network of pre-existing bilateral FTAs. Australia, Peru and Vietnam – and now the USA – have agreed to negotiate with the P4 to enter an expanded Trans-Pacific Part¬nership (TPP). More ambitiously in terms of geographic coverage, an “ASEAN plus Three” (APT) FTA (the “three” being Japan, South Korea and China) has been touted. There is talk of an “ASEAN plus Six” FTA that would subsume APT plus India, Australia and New Zealand. The first East Asia Summit (EAS), held in Kuala Lumpur in 2005, gave impetus to these ideas. An ASEAN-Plus-Six FTA has been promoted by the Japanese government – as a counter to what Japan sees as an inevitably China- centered APT. And now the Australian Prime Minister, Kevin Rudd, has floated the idea of an Asia-Pacific Community, probably reaching across to North America and some South American
  • 17. countries. This would be an overarching forum that would cover political, security and economic issues. Monetary and financial policies There are three main sets of regional initiatives on monetary and financial cooperation, all centered on East Asia: the Chiang Mai Initiative on currency swaps; the Asian Bond Fund and the Asian Bond Market Initiative; and the Asian Currency Unit. These are all “soft” or “middle- strength” ideas, not “hard” proposals for exchange-rate and monetary coordination or harmonization of financial regulations. One harder proposal – for an Asian Monetary Fund – was tabled by the Japanese government in response to the Asian financial crisis in 1997/8. It was promptly shot down by the US administration as an unwelcome rival to the IMF. Also note that, to date, none of these initiatives includes India or the rest of south Asia. The Chiang Mai Initiative (CMI) was a direct response to the Asian crisis. Established in 2000, it is a network of currency-swap arrangements among ASEAN countries, and more widely among the ASEAN Plus Three. It is intended as a precautionary crisis-preventing measure by increasing the availability of liquidity and instilling market confidence. But it is very “soft”. Its aggregate size is tiny compared with foreign-exchange reserves in the region (the major Asian countries have a total of almost USD 4 trillion in reserves); and it has not yet been “multi lateralized” – it has no collective mechanism to approve or coordinate bilat¬eral swaps. It remains voluntary and uncoordinated. Revealingly, the CMI was not used in response to the recent global economic crisis. The global and regional political context: Those who favor a big push for regional economic integration in Asia now have their day in the sun. They say that the global economic crisis has accelerated the decline of the US and the rise of China, India and other parts of Asia. Power is shifting inexorably from the West to Asia.34 the new Japanese government also wants to accelerate east-Asian economic integra¬tion. In geopolitics, security relations have altered since the end of the Cold War. The end of communism, the rise of new powers (China and India), and the questioning of security dependence on the US (in South Korea and Japan), have opened up new ground. Now, there¬fore, is the time to strengthen regional institutions and regional economic integration. But I have doubts. The foundations for Asian regionalism are still weak. In East Asia, trade-and- investment integration has been market-led and bottom-up. It has not been driven by top-down policy initiatives such as FTAs or regional institutions like ASEAN and APT – let alone “international regimes” or “global governance”. Rather it has been led by unilateral, country-by- country liberalization of trade and FDI. This opened the door to first American and Japanese and then other MNEs to set up vertically-integrated production networks, linked to global supply chains and final markets in the West. This happened in Southeast Asia in the 1980s (earlier in Singapore), with China inserting itself into regional production networks from the 1990s.
  • 18. China’s massive unilateral liberalization in the 1990s, before it joined the WTO, spurred additional unilateral liberalization in Southeast Asia. They moved up to higher-value production of parts and components while labor-intensive production migrated to China, and more recently to Vietnam. Current scenario: The two-day conference, organized by the South Asia Watch on Trade, Economics and Environment (Sawtee), aims to present policy messages and recommendations for the benefit of governments in South Asia. “Nepal’s neighborhoods have been dynamic, but our efforts have been less focused on benefiting from the two emerging economies,” said Danish Bhattarai, foreign affairs adviser to the prime minister. “Inadequate infrastructure to facilitate trade and high operating costs have been impeding the country’s trade. Meanwhile, the agriculture sector-the largest employment provider-has been neglected or is suffering from low investment.” Bhattarai added that lack of development in these two major sectors had kept Nepal trapped in a vicious circle of poverty. “This is also the case of other South Asian economies.” He underscored the need for regional policy cooperation and coordination to advance the reforms of regional and intra-regional connectivity for trade facilitation. “As we are holding the 18th Saarc Summit in November this year, the outcomes of the conference will be considered and recommended in the summit deliberations,” added Bhattarai. Similarly, Officiating Secretary at the Ministry of Foreign Affairs Shankar Das Bairagi said that successful countries have been able to take advantage of globalization. “In terms of South Asian nations, the picture of globalization is different, as all the South Asian economies remain least integrated.” Given the current scenario, there is a need for increasing the region’s investment in trade and facilitation of intra-regional trade and transit. The primary focus of South Asia should be on coherent policy actions to address stronger recovery, particularly in the farm sector, he said. AMERICA NAFTA OBJECTIVES OF NAFTA
  • 19.  To reduce barriers to trade.  To increase cooperation for improving working conditions in North America.  To create an expanded and safe market for goods and services produced in North America.  To establish clear and mutually advantageous trade rules.  To help develop and expand world trade and provide a catalyst to broader international cooperation. YEAR OF ESTABLISHED NAFTA On January 1, 1994, the North American Free Trade Agreement between the United States, Canada, and Mexico (NAFTA) entered into force. All remaining duties and quantitative restrictions were eliminated, as scheduled, on January 1, 2008. NAFTA created the world's largest free trade area, which now links 450 million people producing $17 trillion worth of goods and services. Trade between the United States and its NAFTA partners has soared since the agreement entered into force. U.S. goods and services trade with NAFTA totaled $1.6 trillion in 2009 (latest data available for goods and services trade combined). Exports totaled $397 billion. Imports totaled $438 billion. The U.S. goods and services trade deficit with NAFTA was $41 billion in 2009. The United States has $918 billion in total (two ways) goods trade with NAFTA countries (Canada and Mexico) during 2010. Goods exports totaled $412 billion; Goods imports totaled $506 billion. The U.S. goods trade deficit with NAFTA was $95 billion in 2010.
  • 20. Trade in services with NAFTA (exports and imports) totaled $99 billion in 2009 (latest data available for services trade). Services exports were $63.8 billion. Services imports were $35.5 billion. The U.S. services trade surplus with NAFTA was $28.3 billion in 2009. MEMBER COUNTRIES OF NAFTA  UNITED STATES OF AMERICA  MEXICO  CANADA FUNCTION OF NAFTA The major functions of NAFTA are:  Eliminate trade barriers in various service sectors belonging to its member nations.  Reduce high Mexican tariffs and help to promote agricultural exports.  Assist firms spanning the three nations to bid on government contracts.  Assure fair market value to investors by reducing risk and offering the same legal rights that are enjoyed by local investors. CURRENT SITUATION OF NAFTA: If you listened to the NAFTA debate in the United States last year, you might mistake it as simply an agreement about jobs. Jobs are very important and I am prepared to make the case that NAFTA will in effect create jobs in Mexico, the United States and Canada. Yet I think we will all readily agree that NAFTA is about much more than just jobs. NAFTA has overarching implications that extend far beyond its job effects.
  • 21. First, I stress that the U.S.-Mexico aspect of NAFTA exemplifies a reciprocal, mutually advantageous cooperation between a developed and a developing country. This is a critical issue with respect to NAFTA and an important component for NAFTA's implementation by the United States. The global arena in which NAFTA occurs is very much a post-Cold War world. The focus will no longer be so exclusively East-West, but increasingly will be returning to North-South. NAFTA is a good news story that shows how the developing and developed worlds can cooperate with each other to their mutual benefit. Second, NAFTA will encourage global as well as regional trade liberalization. We probably would not have been able to conclude the Uruguay Round of GATT talks in December 1993 if NAFTA had been defeated. Moreover, many of the GATT contracting parties appreciate that if we cannot liberalize world markets through a multilateral forum such as the General Agreement on Tariffs and Trade (soon to be rechristened the World Trade organization), those who most ardently champion trade. Central American Integration System The Central American Integration System (Spanish: Sistema de la Integración Centroamericana, or SICA) is the economic and political organization of Central American states since February 1, 1993. On December 13, 1991 the ODECA countries (Spanish: Organización de Estados Centroamericanos) signed the Protocol of Tegucigalpa, extending earlier cooperation for regional peace, political freedom, democracy and economic development. SICA's General Secretariat is in El Salvador. In 1991, SICA's institutional framework included Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. Belize joined in 2000 as a full member, while the Dominican Republic became an associated state in 2004 and a full member in 2013. Mexico, Chile and Brazil became part of the organization as regional observers, and the Republic of China, Spain, Germany and Japan became extra-regional observers. SICA
  • 22. has a standing invitation to participate as observers in sessions of the United Nations General Assembly,[1] and maintains offices at UN Headquarters.[2] Four countries (Guatemala, El Salvador, Honduras, and Nicaragua) experiencing political, cultural and migratory integration have formed a group, the Central America Four or CA-4, which has introduced common internal borders and the same type of passport. Belize, Costa Rica, Panama and the Dominican Republic join the CA-4 for economic integration and regional friendship. OBJECTIVES OF SICA: The objectives of this Act (SICA) as incorporated in its preamble, emphasizes the following points: The SICA had been enacted in the public interest to deal with the problems of industrial sickness with regard to the crucial sectors where public money is locked up. It contains special provisions for timely detection of sick and potentially sick industrial companies, speedy determination and enforcement of preventive, remedial and other measures with respect to such companies. Those measures are to be taken by a body of experts. The measures are mainly (a) Legal (b) Financial restructuring (c) Managerial
  • 23. YEAR OF ESTABLISHED SICA: In 1991, SICA's institutional framework included Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. Belize joined in 2000 as a full member, while the Dominican Republic became an associated state in 2004 and a full member in 2013. Mexico, Chile and Brazil became part of the organization as regional observers, and the Republic of China, Spain, Germany and Japan became extra-regional observers. SICA has a standing invitation to participate as observers in sessions of the United Nations General Assembly and maintains offices at UN Headquarters. MEMBER COUNTRIES OF SICA: Member countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, joined later by Belize. Associated country: Dominican Republic. Regional observer country: Mexico. Extra-regional observer countries: China and Spain. FUNCTION OF SICA:  Internal factors are those which arise within an organization. They include:- • Mismanagement in various functional areas of a company like finance, production, marketing and personnel; • Wrong location of a unit;
  • 24. • Overestimation of demand and wrong dividend policy; • Poor implementation of projects which may be due to improper planning or managerial inefficiency; • Poor inventory management in respect of finished goods as well as inputs; • Unwarranted expansion and diversion of resources such as personal extravagances, excessive overheads, acquisition of unproductive fixed assets, etc. • Failure to modernize the productive apparatus, change the product mix and other elements of marketing mix to suit the changing environment; • Poor labor-management relationship and associated low workers' morale and low productivity, strikes, lockouts, etc.  External factors are those which take place outside an organization. They include:-  Energy crisis arising out of power cuts or shortage of coal or oil;  Failure to achieve optimum capacity due to shortage of raw materials as a result of production set-backs in the supply industries, poor agricultural output because of natural reasons, changes in the import conditions, etc.  Infrastructural problems like transport bottlenecks;  Credit squeeze;  Situations like market recession, changes in technology, etc.  International pressures or circumstances, etc. Industrial sickness may be caused by a combination of all such factors. It has several adverse consequences on the economy as a whole. Some of which may be enumerated as follows:-  It leads to loss of substantial revenue to the Government and enhances its public expenditure;  It locks up necessary resources and funds in the sick unit. This also increases the non-performing assets (NPAs) of banks and financial institutions;
  • 25.  It leads to loss of production and productivity in the economy;  It aggravates the problem of unemployment in the economy; Conclusion Summarizes the main findings of the report on Regional Economic Integration in EU, Asia, America and provides a broad direction for reform priorities. The major political changes sweeping through the region today provide an opportunity to introduce economic and social reforms conducive to economic growth and job creation in an increasingly competitive world. Leaders throughout the region are looking for new measures their governments can take to boost growth and employment. Deeper regional and global economic integration presents valuable opportunities to (1) make the region more attractive to investors, (2) boost productivity and competitiveness, and (3) create opportunities for the good jobs that young people in the region need. The Arab Spring provides an opportunity for countries to break with the slow reform pace of the past and embark on a faster, deeper, more comprehensive reform agenda, with strong support from the donor community. References: http://en.wikipedia.org/wiki/Regional_integration http://www.uneca.org/our-work/regional-integration-and-trade http://carleton.ca/ces/eulearning/introduction/what-is-the-eu/extension-what-is-regional- integration/ http://www.nepad.org/regionalintegrationandinfrastructure http://aric.adb.org/integrationindicators http://asiafoundation.org/in-asia/2013/01/09/regional-integration-asias-new-frontier-in-2013/ http://unu.edu/publications/books/regional-integration-in-east-asia-theoretical-and-historical- perspectives.html#overview http://en.wikipedia.org/wiki/Latin_American_integration http://www.iadb.org/en/topics/regional-integration/regional-integration,1404.html http://subweb.diis.dk/sw93239.asp
  • 26. http://www.economist.com/news/americas/21571157-regions-anachronistic-new-face-past-and- future