Globalization-and-Regional-Economic-Integration

BusinessEnglishReadingGlobalizationandRegionalEconomicIntegrationLearningpurposeUnderstandthebackgroundofinternationaltradeandvariousorganizationsGlobaleconomy--WTORegionaleconomy--NAFTA,EU,APEC,ASEANUnderstandthetraderestrictionsimportrestrictions(tariffs,quotas)exportsubsidiesQforstudentsWhatisGlobalization?Globalization:ConceptGlobalizationreferstotheshifttowardamoreintegratedandinterdependentworldeconomy.Globalizationofmarkets:referstothemergingofhistoricallydistinctandseparatenationalmarketsintoonehugeglobalmarketplacee.g.McDonald's,Starbucks,IKEA,Coca-Cola,Boeing,Sony,MictrosoftGlobalizationofproduction:referstothesourcingofgoodsandservicesfromlocationsaroundtheglobetotakeadvantageofnationaldifferenceinthecostandqualityoffactorsofprodction(suchaslabor,energy,land,andcapital)Globalization:Concept(cont.)e.g.LenovoThinkPadlaptopcomputer'sglobalwebofactivitiesdesigninU.S.productionofcase,keyboardandharddriveinThailandproductionofdisplayscreenandmemoryinSouthKoreaproductionofbuilt-inwirelesscardinMalaysiaproductionofmicroprocessorinU.S.assemblyinMexicofinalsaleinU.S.lowerproductionandtransportationcostslowlaborcostspersonnelhavebetterknowledgeofthemarketplacetheworld'sbestlocationforbasicdesignworkGlobalization:ProsandConsBenefitsofGlobalization:wealth,jobs,technology,lowerprices.**WatchVideo:GlobalizationCriticismsofGlobalization:off-shoringofbusinessservicejobstolower-wagecountries;growingtradedeficits;slowwagegrowth;environmentalandsocialimpacts.**WatchVideo:TheDarksideofGlobalizationEmergenceofGlobalInstitutionsGATTWTOInthepostWorldWarIIera,theGerneralAgreementonTariffsandTrade(GATT)wasanagreementthatpromptedregularnegotiationsamongagrowingbodyofmemberstoreducetariffsonimportedgoodsonareciprocalbasis.In1993(duringtheUruguayRound),theGATTwasupdatedtoincludenewobligationsuponitssignatories.OneofthemostsignificantchangeswasthecreationoftheWorldTradeOrganization(WTO).The75existingGATTmembersandtheEuropeanCommunitiesbecamethefoundingmembersoftheWTOon1January1995.Theother52GATTmembersrejoinedtheWTOinthefollowingtwoyears(thelastbeingCongoin1997).SincethefoundingoftheWTO,21newnon-GATTmembershavejoinedand29arecurrentlynegotiatingmembership.Thereareatotalof153membercountriesintheWTO.GATTWTO(cont.)Eightroundsofnegotiations:1AnnecyRound19492TorquayRound19513GenevaRound1955-19564DillonRound1960-19625KennedyRound1964-19676TokyoRound1973-19797UruguayRound1986-19948DohaRound2001-Thisroundmainlyfocusesontariffs,non-tariffmeasures,agriculture,laborstandards,environment,competition,investment,transparency,patentsetc**WatchVideo:世界贸易组织成立RegionalTradeAgreementHowever,particiallybecauseoftheslow,ploddingpaceofliberaliaatrionundertheGATT/WTO,anotherinternationalpushfortradeliberalizationhascomeintheformofregionalfreetradeagreements.Manycountrieshavenegotiagtedwithneighboringcountriesormajortradingpartnerstopromoteevenfastertradelibarablization.RegionalEconomySharinglowmacroeconomicgrowth,similartechnologicalinfrastructure,large,capitalandknowledgeintensivefirmsinmostindustries,relativehomogeneityofdemand,protectionistmeasuresNAFTAEUJapanTriadTradeLevelsofRegionalEconomicIntegration(REI)1.FreeTradeAreaNointernaltariffsEachcountrydeterminesitsowntradepoliciestowardsnon-memberse.g.NAFTA--NorthAmericaFreeTradeAgreement(US,Canada,Mexico)2.CustomsUnionAsforFTAabove++Commonexternaltariffongoodsimportedfromoutsidee.g.AndeanPact(Bolivia,Colombia,Ecuador,Peru)3.CommonMarketAsforCustomsUnionabove++LaborandcapitalarefreetomoveNorestrictionsonmigratione.gEuropeanCommunitybefore1994.54321LevelsofRegionalEconomicIntegration(cont.)4.EconomicUnionAsforcommonmarketabove++CommoncurrencyHarmonizationoftaxratesCommonmonetaryandfiscalpoliciese.g.EuropeanUnion5.PoliticalUnionEuropeanParliament,directlyelectedbythecitizensoftheEUmembercountriesAnadministrativebureaucracyCouncilofMemberscomposedbyministersfromeachEUcountryCourtofJusticeasanofficialinterpreterofEUlawRegionalEconomicIntegrationinAsiaCERAustraliaandNewZealandASEANBrunei,Indonesia,Malaysia,Philippines,Singapore,Thailand,Vietnam,Laos,MyanmarAPECAustralia,Brunei,Canada,China,HongKong,Indonesia,Japan,Korea,Malaysia,Mexico,Chile,NewZealand,PapuaNewGuinea,Philippines,Singapore,Taiwan,Thailand,UnitedStates,SingaporeandAustraliaAsiaPacificEconomicCooperation(APEC)Foundedin1990to‘promoteopentradeandpracticaleconomiccooperationPromoteasenseofcommunity18members50%ofworld’sGNP40%ofglobaltradeBusinessImplicationsEuropeanREIOpportunitiesGlobal-typeratherthanmultidomestic-typestrategy,economiesofscaleadvantages,selectionofoptimallocationThreatsIncreasedcompetitionPrevioushigh-costEuropeanfirmswillbecomelow-costglobalcompetitorsNorthAmericanREIOpportunitiesEconomiesofscaleadvantageThreatsVigorouscompetitionasNorthAmericanfirmsseektoretainmarketsharePossible“BuyAmerican”backlashAsianREIOpportunitiesStillcountry-specific,butpossibleintegrationshouldpromoteFDIThreatsPerceivedexploitativebehaviorbyforeignfirms(egAustralian,US