The document discusses various forms of cross-national cooperation and economic integration agreements. It describes the World Trade Organization (WTO) and its goals of facilitating open trade and adjudicating disputes between member nations. Regional economic integration aims to reduce or eliminate trade barriers between nations and can take the form of free trade areas, customs unions, common markets, or full economic unions with shared policies and currency. Examples discussed include the European Union, NAFTA, and various regional bodies in Asia, Africa, and elsewhere.

1. Cross-national Cooperation and
Agreements

2. World Trade Organization (WTO)
 General Agreement on Tariffs and
Trade (GATT) formed in 1947 was
replaced by WTO in 1995.
 The goal of WTO is…
To facilitate the development of a free
and open trading system in the world
To adjudicate trade disputes between
or amongst member nations
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3.  WTO rulings are binding. If an offending
country fails to comply with a judgment,
the rights to compensation and
countervailing sanctions will follow.
 Most-favored nation clause (MFN): is
the fundamental principle of “trade
without discrimination.”
 WTO Rounds-Doha Round (2001-till
date)
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4. Economic Integration
 Economic integration: is an agreement between or
amongst nations within an economic block to
reduce and ultimately remove tariff and nontariff
barriers. Factors favoring integration are:
- Cultural similarity
- Geographic proximity
- Political will
 Approaches to economic integration include:
global integration via the World Trade
Organization
bilateral integration between two countries
regional integration via an economic bloc
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5. Effects of Economic Integration
Static effects: the shifting of resources from inefficient to
efficient firms as trade barriers fall
Trade creation: production shifts from less efficient domestic
producers to more efficient regional producers
Trade diversion: trade shifts from more efficient external
sources to less efficient suppliers within the bloc following the
imposition of common external barriers
Dynamic effects: the gains from overall market growth, the
expansion of production, the realization of greater
economies of scale and scope, and the increasingly
competitive nature of the market
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6. Types of Regional Economic
Integration
 Regional Cooperation: initial moves, no
serious tariff implication
 Free Trade Area: no internal tariff
 Customs Union: no internal tariff and
common external tariff
 Common Market: no internal tariff, common
external tariff and factor mobility
 Economic Integration: no internal tariff,
common external tariff, factor mobility,
common fiscal and monetary policy,
common currency, and political integration

7. Structure of European Union
 European Parliament (elected by the
peoples of the Member States)
 Council of the European Union
(representing the governments of the
Member States)
 European Commission (driving force and
executive body)
 Court of Justice (ensuring compliance with
the law)
 Court of Auditors (controlling sound and
lawful management of the EU budget)

8. North American Free Trade Agreement (NAFTA)
 Established in 1994 by United States, Canada and
Mexico, phases in over a period of 15 years
 Claims a total GNI that is greater than that of the 25-
member EU
 NAFTA covers:
Market access (tariff and nontariff barriers)
Trade rules (subsidies and antidumping)
Services
Investment
Intellectual property
Dispute resolution
 Good example of trade diversion

9. Regional Integration Groups
 Europe
○ European Union (EU)
○ European Free Trade Association (EFTA)
 Asia
○ Association of Southeast Asian Nations (ASEAN)
○ Asia Pacific Economic Cooperation (APEC)
○ South Asian Association for Regional Cooperation (SAARC)
○ Economic Cooperation Organization (ECO)
○ Gulf Cooperation Council (GCC)
 Africa
○ Southern African Development Community (SADC)
○ Common Market for Eastern and Southern Africa (COMESA)
○ Economic Community of West African States (ECOWAS)

10. Association of South East Asian Nations
(ASEAN)
 Organized in 1967
 Member countries are protected in terms
of tariff and nontariff barriers
 Holds tremendous potential market
opportunities with 500 million consumers