INTB 3355 FINAL REVIEW EXAM QUESTIONS AND
ANSWERS
/.Types of Economic Integration Agreements - Answer-✅- Free trade area (FTA)
- Customs union
- Common market
- Complete economic integration
/.Free Trade Area (FTA) - Answer-✅- NAFTA: drop internal tariffs
- free trade area: area in which tariff among members have been eliminated, but
members keep their external tariffs.
1. Example: Association of Southeast Asian Nation (ASEAN)
2. Example: North American Free Trade Agreement (NAFTA) (Canada, Mexico, US):
drop internal tariffs
- restriction remain on movement of service, people, and capital
/.Customs Union - Answer-✅- collaboration that adds common external tariffs to the
FTA
1. Example: The Southern African Customs Union (SACU, 1910): oldest; South Africa,
Lesotho, Namibia, Swaziland, and Botswana members
2. Example: Common Market of the South (Mercosur or Mercosul): Argentina, Brazil,
Paraguay, Uruguay, and Venezuela, and the Andean Community (Perú, Ecuador,
Bolivia, Colombia)
/.Common market - Answer-✅- created when a customs union lift restrictions on the
mobility of services, people, and capital among the member-nations
- Single market; all barriers (standards, borders, taxes) become common
/.complete economic integrations - Answer-✅- The final stage of economic integration:
The integrated units (Policy) have no or negligible control of economic policy, including
full monetary union and complete or near-complete fiscal policy harmonisation. - -
Complete economic integration is most common within countries, rather than within
supranational institutions.
- An example of this are the original thirteen colonies of the United States of America,
which can be viewed as a series of highly integrated quasi-autonomous nation states. In
this example it is true that complete economic integration results in a federalist system
of governance as it requires political union to function as, in effect, a single economy.
/.Economic Integration agreements - Answer-✅- Represents attempts by nations to
create agreements that lead to improved trade conditions for parties to the agreement
- Informal normative institutions
, - Follow a general pattern
- Trading blocs (FTA, common markets) bring cost reductions inside integrated areas
through reductions in tariffs, quotas, and trade barriers and bring const increases
outside the trading blocs
/.International Institutions from an International Business Perspective - Answer-✅-
Economic Integration Agreements
- NAFTA
- The European Union
/.NAFTA (North American Free Trade Agreement)- Launched - Answer-✅- January 1,
1994 among Canada, Mexico and United States
- Created one of the world's largest free trade zones and one of the most powerful
productive forces in the global economy
- Trade in Northern America tariff-free
- Last trade area to have tariffs dropped was U.S. corn exports in Mexico
/.NAFTA Main Goals - Answer-✅- promoting economic growth by easing the movement
of goods and services between the US, Mexico and Canada
/.NAFTA Percursor - Answer-✅- Canada-US Free Trade Agreement (since 1989)
/.NAFTA Stipulations - Answer-✅- Removal of most tariffs and restrictions on trade
between the U.S., Canada, and Mexico
- Wide range of agreements on agricultural, textile and automotive trade
- Agreements on telecommunications and intellectual property
- mobility workers
- environmental policies
/.NAFTA concerns for US - Answer-✅losing manufacturing jobs to Mexico
/.NAFTA concerns for mexico - Answer-✅- US migration policies
- High corn subsidies for US farmers
/.NAFTA concerns for canada - Answer-✅- Energy trade policies
- losing manufacturing jobs to Mexico
/.NAFTA positive consequences - Answer-✅1. Intra-North American trade has more
than tripled since NAFTA's inception
2. Agricultural trade in both directions between Mexico and the US increased from $7.3
billion in 1994 to $ 20.1 billion in 2006
3. Trade between the three parties currently accounts for about 80% of Canadian and
Mexican trade and more than a third of US trade
4. Increased foreign direct investment between the three countries
5. Mexico protected from financial instability in South America
ANSWERS
/.Types of Economic Integration Agreements - Answer-✅- Free trade area (FTA)
- Customs union
- Common market
- Complete economic integration
/.Free Trade Area (FTA) - Answer-✅- NAFTA: drop internal tariffs
- free trade area: area in which tariff among members have been eliminated, but
members keep their external tariffs.
1. Example: Association of Southeast Asian Nation (ASEAN)
2. Example: North American Free Trade Agreement (NAFTA) (Canada, Mexico, US):
drop internal tariffs
- restriction remain on movement of service, people, and capital
/.Customs Union - Answer-✅- collaboration that adds common external tariffs to the
FTA
1. Example: The Southern African Customs Union (SACU, 1910): oldest; South Africa,
Lesotho, Namibia, Swaziland, and Botswana members
2. Example: Common Market of the South (Mercosur or Mercosul): Argentina, Brazil,
Paraguay, Uruguay, and Venezuela, and the Andean Community (Perú, Ecuador,
Bolivia, Colombia)
/.Common market - Answer-✅- created when a customs union lift restrictions on the
mobility of services, people, and capital among the member-nations
- Single market; all barriers (standards, borders, taxes) become common
/.complete economic integrations - Answer-✅- The final stage of economic integration:
The integrated units (Policy) have no or negligible control of economic policy, including
full monetary union and complete or near-complete fiscal policy harmonisation. - -
Complete economic integration is most common within countries, rather than within
supranational institutions.
- An example of this are the original thirteen colonies of the United States of America,
which can be viewed as a series of highly integrated quasi-autonomous nation states. In
this example it is true that complete economic integration results in a federalist system
of governance as it requires political union to function as, in effect, a single economy.
/.Economic Integration agreements - Answer-✅- Represents attempts by nations to
create agreements that lead to improved trade conditions for parties to the agreement
- Informal normative institutions
, - Follow a general pattern
- Trading blocs (FTA, common markets) bring cost reductions inside integrated areas
through reductions in tariffs, quotas, and trade barriers and bring const increases
outside the trading blocs
/.International Institutions from an International Business Perspective - Answer-✅-
Economic Integration Agreements
- NAFTA
- The European Union
/.NAFTA (North American Free Trade Agreement)- Launched - Answer-✅- January 1,
1994 among Canada, Mexico and United States
- Created one of the world's largest free trade zones and one of the most powerful
productive forces in the global economy
- Trade in Northern America tariff-free
- Last trade area to have tariffs dropped was U.S. corn exports in Mexico
/.NAFTA Main Goals - Answer-✅- promoting economic growth by easing the movement
of goods and services between the US, Mexico and Canada
/.NAFTA Percursor - Answer-✅- Canada-US Free Trade Agreement (since 1989)
/.NAFTA Stipulations - Answer-✅- Removal of most tariffs and restrictions on trade
between the U.S., Canada, and Mexico
- Wide range of agreements on agricultural, textile and automotive trade
- Agreements on telecommunications and intellectual property
- mobility workers
- environmental policies
/.NAFTA concerns for US - Answer-✅losing manufacturing jobs to Mexico
/.NAFTA concerns for mexico - Answer-✅- US migration policies
- High corn subsidies for US farmers
/.NAFTA concerns for canada - Answer-✅- Energy trade policies
- losing manufacturing jobs to Mexico
/.NAFTA positive consequences - Answer-✅1. Intra-North American trade has more
than tripled since NAFTA's inception
2. Agricultural trade in both directions between Mexico and the US increased from $7.3
billion in 1994 to $ 20.1 billion in 2006
3. Trade between the three parties currently accounts for about 80% of Canadian and
Mexican trade and more than a third of US trade
4. Increased foreign direct investment between the three countries
5. Mexico protected from financial instability in South America
