INTB 200 Exam 2 – End Term A+ Graded Study
Material
Free Trade Area Definition - ✔✔- All barriers to the trade of goods and services among member
countries are removed, but members determine their own trade policies with nonmembers.
- Accounts for almost 90% of regional agreements.
Free Trade Area Example - ✔✔- European Free Trade Association (EFTA) between Norway, Iceland,
Leichtenstein, and Switzerland began in 1960.
- Other free trade areas include NAFTA, now replaced by the United States Mexico - Canada Agreement
(USMCA)
Customs Union Definition - ✔✔Eliminate trade barriers between member countries and adopts a
common external trade policy.
Customs Union Example - ✔✔Andean Community established free trade between Bolivia, Columbia,
Ecuador, and Peru.
Common Market Definition - ✔✔- No barriers to trade between member countries, a common external
trade policy, and the free movement of the factors of production.
- Requires significant harmony among members in fiscal, monetary, and employment policies.
Common Market Example - ✔✔Mercosur (between Brazil, Argentina, Paraguay, and Uruguay) hopes to
achieve this status.
Economic Union Definition - ✔✔Countries committed to the free flow of products and factors of
production between members, adoption of a common currency, harmonization of tax rates, and pursuit
of a common external trade policy.
Economic Union Example - ✔✔European Union
, Political Union Definition - ✔✔- Independent states combined into a single union.
- Requires that a central political apparatus coordinate economic, social, and foreign policy for member
states.
Political Union Example - ✔✔The United States is an example of even closer political union.
Political Case for Integration - ✔✔- By linking countries together, making them more dependent on each
other, and forming a structure where they regularly interact, the likelihood of violent conflict and war
will decrease.
- They have greater clout and are politically much stronger in dealing with other nations.
Economic Case for Integration - ✔✔- Regional economic integration attempts to achieve additional gains
from the free flow of trade and investment between countries beyond those attainable under
international agreements such as the WTO.
- Since it is easier to form an agreement with a few countries than across all nations, there has been a
push toward regional economic integration.
Trade Creation - ✔✔Occurs when low-cost producers within the free trade area replace high-cost
domestic producers.
Trade Diversion - ✔✔Occurs when higher-cost suppliers within the free trade area replace lower-cost
external suppliers.
EU - ✔✔- European Union
- 27 members (not Britain)
EU milestones - ✔✔- Devastation of western Europe during two world wars and desire for lasting peace.
- Many countries, particularly from eastern Europe, have applied for membership.
- GB voted to leave on June 23, 2016.
Material
Free Trade Area Definition - ✔✔- All barriers to the trade of goods and services among member
countries are removed, but members determine their own trade policies with nonmembers.
- Accounts for almost 90% of regional agreements.
Free Trade Area Example - ✔✔- European Free Trade Association (EFTA) between Norway, Iceland,
Leichtenstein, and Switzerland began in 1960.
- Other free trade areas include NAFTA, now replaced by the United States Mexico - Canada Agreement
(USMCA)
Customs Union Definition - ✔✔Eliminate trade barriers between member countries and adopts a
common external trade policy.
Customs Union Example - ✔✔Andean Community established free trade between Bolivia, Columbia,
Ecuador, and Peru.
Common Market Definition - ✔✔- No barriers to trade between member countries, a common external
trade policy, and the free movement of the factors of production.
- Requires significant harmony among members in fiscal, monetary, and employment policies.
Common Market Example - ✔✔Mercosur (between Brazil, Argentina, Paraguay, and Uruguay) hopes to
achieve this status.
Economic Union Definition - ✔✔Countries committed to the free flow of products and factors of
production between members, adoption of a common currency, harmonization of tax rates, and pursuit
of a common external trade policy.
Economic Union Example - ✔✔European Union
, Political Union Definition - ✔✔- Independent states combined into a single union.
- Requires that a central political apparatus coordinate economic, social, and foreign policy for member
states.
Political Union Example - ✔✔The United States is an example of even closer political union.
Political Case for Integration - ✔✔- By linking countries together, making them more dependent on each
other, and forming a structure where they regularly interact, the likelihood of violent conflict and war
will decrease.
- They have greater clout and are politically much stronger in dealing with other nations.
Economic Case for Integration - ✔✔- Regional economic integration attempts to achieve additional gains
from the free flow of trade and investment between countries beyond those attainable under
international agreements such as the WTO.
- Since it is easier to form an agreement with a few countries than across all nations, there has been a
push toward regional economic integration.
Trade Creation - ✔✔Occurs when low-cost producers within the free trade area replace high-cost
domestic producers.
Trade Diversion - ✔✔Occurs when higher-cost suppliers within the free trade area replace lower-cost
external suppliers.
EU - ✔✔- European Union
- 27 members (not Britain)
EU milestones - ✔✔- Devastation of western Europe during two world wars and desire for lasting peace.
- Many countries, particularly from eastern Europe, have applied for membership.
- GB voted to leave on June 23, 2016.
