Case Study

2612 words 11 pages




1) There are some 200 economic integration agreements in effect around the world already, far more than even a few years ago. Virtually every country is now party to one or more free trade agreements. Supporters argue that free trade is good for nations.

a) What is the basis for their support? That is, what are the specific benefits that countries seek by joining an economic bloc?

Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas. According to the law of comparative advantage, the policy permits trading partners’ mutual gains from
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- Elimination of investment impediments. - Streamlining of investment process and procedures. - Enhancing transparency - Undertaking investment facilitation measures

Full realization of the ACIA with the removal of temporary exclusion lists in manufacturing agriculture, fisheries, forestry and mining is scheduled by 2010 for most ASEAN members and by 2015 for the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries.

d) What disadvantages has bloc membership produced?

The main disadvantage of AFTA is the common effective preferential tariff or CEPT. This tariff is not applicable on all import goods. There is a charge or tariff imposed on the imported goods, which is not beneficial from the point of view of customer. The goods that are imported from outside the non-participating ASEAN countries are heavily taxed.

2) Describe the major characteristics of the European Union.

The major characteristics of the European Union are as follows:

• Provide peace, prosperity and stability for its peoples; • Overcome the divisions on the continent; • Ensure that its people can live in safely; • Promote balanced economic and social development; • Meet the challenges of globalization and preserve the diversity of the peoples of Europe; • Uphold the values that European share, such as sustainable development and a


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