Chapter 10 Multinational Market Regions and Market Groups

Chapter 10 Multinational Market Regions and Market Groups

Successful Economic Union Requirements Economic Compatibility Political Compatibility Geographic Proximity Cultural Compatibility 10 -2 Weakness in some must be balanced by strengths in others Irwin/Mc. Graw-Hill

Patterns of Multinational Cooperation Regional Cooperation Groups Free Trade Area Customs Union Common Market Political Union 10 -3 Irwin/Mc. Graw-Hill

European Trade Areas - 1997* 10 -4 European Community (EC) Belgium Italy Denmark Luxembourg France The Netherlands Germany Portugal Greece Spain Ireland United Kingdom European Unity (EU) EC Countries and Austria Finland European Economic Area (EEA) EU Countries and Norway Iceland Sweden In Membership Negotiations Cypress Hungary Czech Republic Poland Estonia Slovenia Irwin/Mc. Graw-Hill European Free Trade Area (EFTA) Iceland Norway Liechtenstein Switzerland Second Tier-Awaiting Evaluation Bulgaria Romania Latvia Slovakia Lithuania Malta * Visit http: //europa. eu. int/ (select Abc and then Agenda 2000 for details on requirements of accession).

The European Economic Area: EU, EFTA, and Associates EU EFTA EC Associated 10 -5 ATLANTIC OCEAN SW ED EN ICELAND NORWAY FINLAND Netherlands DENMARK UNITED IRELAND BELGIUM KINGDOM GERMANY FRANCE Switz. Austria ITALY Portugal SPAIN TURKEY MALTA Irwin/Mc. Graw-Hill GREECE

EC Institutions European Commission 10 -6 Council of Ministries European Parliament European Court of Justice Irwin/Mc. Graw-Hill

A Comparison of the EU and NAFTA Population ($ millions)* 10 -7 GNP (per capita)* Imports** ($ millions) Exports** ($ millions) EU* 373. 5 $ 8, 180 1, 899, 466 1, 927, 914 NAFTA 387. 4 8, 061 1, 014, 211 852, 536 * Includes 15 Countries. **Includes intra-member trade. Irwin/Mc. Graw-Hill SOURCES: “Indicators of Market Size for 115 Countries, ” Crossborder Monitor, August 27, 1997; and International Marketing Data and Statistics, 1997 (London: Euromonitor, 1997).

Treaty of Amsterdam - Objectives To place employment and citizens’ rights at the heart of the Union. To sweep away the last remaining obstacles to freedom of movement and to strengthen security. To give Europe a stronger voice in world affairs. To make the Union’s institutional structure more efficient with a view to enlarging the Union. 10 -8 Irwin/Mc. Graw-Hill For the most current information, visit www. europa. eu. int.

Level of Involvement with the EC 10 -9 1. Firms based in Europe with well-established manufacturing and distribution operations in several European countries. 2. Firms with operations in a single EC country. 3. Firms that export manufactured goods to the EC from an offshore location. 4. Firms that have not actively exported to EC countries. Irwin/Mc. Graw-Hill

Commonwealth of Independent States ARCTIC OCEAN MOLDOVA BELARUS 10 -10 UKRAINE RUSSIAN REPUBLIC GEORGIA ARMENIA AZERBAIJAN TURKMENISTAN KAZAKHSTAN UZBEKISTAN TAJIKISTAN Irwin/Mc. Graw-Hill KYRGYZSTAN Twelve republics, each with their own legislatures Twenty smaller “autonomous republic” or homelands for various ethnic groups

Central European Free-Trade Area (CEFTA) Poland Hungary Slovakia Czech Republic Slovenia Romania 10 -11 Irwin/Mc. Graw-Hill

North American Free-Trade Area (NAFTA) 10 -12 Canada United States Mexico Irwin/Mc. Graw-Hill

North American Free-Trade Area Provisions 10 -13 Market Access Non Tariff Barriers Rules of Origin Customs Administration Investment Services Intellectual Property Standards Government Procurement Irwin/Mc. Graw-Hill

NAFTA Rules of Origin Rule Type Description Tariff shift rule Non-NAFTA imports undergo sufficient manufacture or processing to become products that can qualify under a different tariff classification. Value-content rule A set percentage of the value of the good must be North American (usually coupled with a tariff classification shift requirement). Some goods are subject to the value-content rule only when they fail to pass the tariff classification test because of non-NAFTA inputs. 10 -14 * A complete description of the rules of origin can be found at www. mac. doc. gov/nafta/menu 1. htm (select NAFTA Rules of Origin and Customs Information). Irwin/Mc. Graw-Hill

Southern Cone Free Trade Area (Mercosur) Argentina Bolivia Brazil Chile Paraguay Uruguay 10 -15 Irwin/Mc. Graw-Hill

Latin American Integration Association (LAIA) Argentina Mexico Bolivia Paraguay Brazil Peru Chile Uruguay Columbia Venezuela Ecuador 10 -16 Irwin/Mc. Graw-Hill

Andean Common Market (ANCOM) Bolivia 10 -17 Columbia Ecuador Peru Venezuela Panama (Assoc. ) Irwin/Mc. Graw-Hill

Caribbean Community and Common Market (CARICOM) 10 -18 Irwin/Mc. Graw-Hill Antigua Barbuda Belize Dominica Grenada Guyana Jamaica Montserrat St. Kitts-Nevis Anguilla St. Lucia St. Vincent Trinidad-Tobago

Central America Common Market (CACM) Guatemala 10 -19 Costa Rica Nicaragua Honduras Irwin/Mc. Graw-Hill

The Future • NAFTA 10 -20 • SAFTA ? ? ? • FTAA ? ? ? Irwin/Mc. Graw-Hill

Association of Southeast Asian Nations (ASEAN) 10 -21 Irwin/Mc. Graw-Hill Brunei Philippines Indonesia Singapore Laos Thailand Malaysia Vietnam Myanmar

ASEAN + 3 10 -22 • Brunei • Singapore • Indonesia • Thailand • Laos • Vietnam • Malaysia China • Myanmar Japan • Philippines South Korea Irwin/Mc. Graw-Hill

Comparison of Exports Among Members of APEC and the EC Population, 1989 (millions) APEC 10 -23 Americas* Asia Oceania EC Exports, 1990 (U. S. $ millions) Exports, 1995 (U. S. $ millions) GNP, 1996 (U. S. $ billions) 2, 235 732, 869 770, 097 22, 952 406 306, 486 311, 085 7, 989 1812 399, 455 419, 901 6, 447 22 26, 928 34, 111 343 374 515, 915 628, 606 8, 180 *includes: U. S. , Canada, Mexico, and Chile. Irwin/Mc. Graw-Hill SOURCES: IMF: International Financial Statistics, Direction of Trade; OECD: National Account, EC Committee: “Indicators of Market Size for 115 Countries, ” Crossborder Monitor, August 27, 1997; and International Marketing Data and Statistics. 1997 (London: Euromonitor, 1997).

Economic Community of West African States (ECOWAS) 10 -24 Irwin/Mc. Graw-Hill Benin Burkina Faso Cote d’ Ivoire Gambia Ghana Guinea-Bissau Liberia Mali Mauritania Nigeria

Southern African Development Community (SADC) Angola Botswana Lesotho Namibia Malawi Mauritius Mozambique 10 -25 Irwin/Mc. Graw-Hill South Africa Swaziland Tanzania Zambia Zimbabwe

Afro-Malagasy Economic Union 10 -26 ▶ Benin ▶ Gabon ▶ Burkina Faso ▶ Mali ▶ Cameroon ▶ Mauritania ▶ Central African Republic ▶ Niger ▶ Chad ▶ Senegal ▶ People’s Repub. of the Congo ▶ Togo ▶ Cote d’Ivoire Irwin/Mc. Graw-Hill

East African Customs Union ▶ Ethiopia ▶ Tanzania ▶ Kenya ▶ Uganda ▶ Sudan ▶ Zambia 10 -27 Irwin/Mc. Graw-Hill

Maghreb Economic Community ▶ Algeria ▶ Tunisia ▶ Libya ▶ Morocco 10 -28 Irwin/Mc. Graw-Hill

Economic Community of West African States (ECOWAS) 10 -29 ▶ Benin ▶ Guinea-Bissau ▶ Burkina Faso ▶ Liberia ▶ Cote d’Ivoire ▶ Mali ▶ Gambia ▶ Mauritania ▶ Ghana ▶ Niger ▶ Guinea ▶ Nigeria Irwin/Mc. Graw-Hill

West Africa Economic Community ● West Africa Economic Community 10 -30 ▶ Senegal ▶ Mali ▶ Togo ▶ Mauritania ▶ Burkina Faso ▶ Niger ▶ Cote d’Ivoire ● Customs and Economic Union of Central Africa (CEUCA) ▶ Cameroon ▶ P. Rep. Of Congo ▶ C. Africa Repub. ▶ Gabon Irwin/Mc. Graw-Hill

Customs and Economic Union of Central Africa (CEUCA) ▶ Cameroon ▶ P. Rep. Of Congo 10 -31 ▶ C. Africa Repub. ▶ Gabon Irwin/Mc. Graw-Hill

Arab Common Market Iraq 10 -32 Kuwait Jordan Syria Egypt Irwin/Mc. Graw-Hill

Economic Cooperation Organization (ECO) Pakistan 10 -33 Iran Turkey Azerbaijan Turkmenistan Uzbekistan Irwin/Mc. Graw-Hill

Future Multinational Trade Groups United States/Japan Hong Kong/Taiwan/China Asia-Pacific Rim Countries Hong Kong/Taiwan/Coastal Provinces of Southern China Western Hemisphere Free Trade Area Transatlantic Free Trade Area (United States and European Union) 10 -34 Irwin/Mc. Graw-Hill