MGT 3650 Chapter Notes - Chapter 8: Free-Trade Area, Doha Development Round, Customs Union
Chapter 8-Capitalizing on Global and Regional Integration
Global economic integration - efforts to reduce trade and investment barriers around the globe
GATT (General Agreement on Tariffs and Trade; 1948-1994)
Reduced level of tariffs through multilateral negotiations.
Three areas of concern:
No protection for services or intellectual property
Loopholes needed reform – Multi fiber Arrangement (MFA)
Global recessions led governments to invoke non-tariff barriers (NTBs)
WTO (World Trade Organization; 1995-present)
Transformed GATT from provisional treaty to full-fledged international organization.
New features:
Agreement governing trade of services (GATS)
Agreement governing intellectual property rights (TRIPS)
Trade dispute settlement mechanisms
Trade policy reviews
WTO – THE DOHA ROUND (2001-2006)
Reduce agricultural subsidies in developed countries.
Slash tariffs, especially in areas where developing countries might benefit.
Free up trade in services.
Strengthen intellectual property protection.
Regional economic integration: efforts to reduce trade/ investment barriers within one region.
- Promotes peace, raises income and stimulates economic
growth
- Consistent rules, disputes handled constructively
- Discrimination against firms outside the region
Free trade area (FTA): A group of countries that remove trade barriers among themselves.
There is no freedom of movement among people.
Customs union: In addition to FTA policies, a customs union has common external policies on
non-participants in order to combat trade diversion.
Common market: In addition to the customs union, allows the free movement of goods and
people.
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