International bussiness the challenge of global competition 11e chapter 04

chapter four International Institutions from an International Business Perspective McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc All rights reserved Learning Objectives  Describe the influence the mainly political international institutions have on international businesses and their relevance to international business  Identify the major organs of the United Nations, their general purpose, and their significance to international business  Discuss the World Trade Organization and its predecessor, GATT  Appreciate the resources of the Organisation for Economic Cooperation and Development 4-3 Learning Objectives  Describe the major purpose and effectiveness of OPEC  Identify economic integration agreements and the effectiveness of the major ones  Discuss the impact of the EU and its future challenges 4-4 Figure 4.1 International Institutions by purpose 4-5 International Political Institutions • The United Nations – International organization of 191 member-nations dedicated to the promotion of peace and global stability; has many functions related to business – General Assembly • Deliberative body of the UN made up of all member-nations, each with one vote regardless of size, wealth, or power 4-6 International Political Institutions – Security Council • Main policy-setting body of the UN, composed of 15 members including permanent members – Economic and Social Council (ECOSOC) • UN body concerned with economic and social issues such as trade, development, education, and human rights 4-7 International Political Institutions – International Court of Justice (ICJ) • UN body that renders legal decisions involving disputes between national governments – Secretariat • The staff of the UN, headed by the secretary-general 4-8 Figure 4.2 Millennium Development Goals Chart of Progress 4-9 Figure 4.2 Millennium Development Goals Chart of Progress 4-10 Other Economic Institutions • Organization of Petroleum Exporting Countries – Cartel of 11 petroleum exporting countries (Table 4.3) • The Group of Eight (G8) – Group of government leaders from major industrialized nations that meets regularly to discuss issues of concern (Figure 4.5) 4-21 Table 4.3 World Petroleum Products Consumption by Region, 1960-2004 4-22 Figure 4.5 The G8 Members (www.undp.org) http://atlas.nrcan.gc.ca/site/english/maps/reference/international/g8/map.jpg 4-23 Economic Integration • Free trade area (FTA) – Area in which tariffs among members have been eliminated, but members keep their external tariffs • Customs Union – Collaboration that adds common external tariffs to an FTA • Common Market – Customs union that includes mobility of services, people, and capital within the union 4-24 North American Free Trade Agreement (NAFTA) • NAFTA – Established January 1, 1994 – Agreement creating a free trade area among Canada, Mexico, and the United States 4-25 European Free Trade Agreement (EFTA) • EFTA – Founded in 1960 by seven European countries: • Austria, Denmark, Norway, Portugal, Sweden, Switzerland, Finland, Iceland, Liechtenstein, and the United Kingdom – Today, a 4-nation non-EU FTA in Europe: Norway, Iceland, Liechtenstein, Switzerland 4-26 African Trade Agreements • African Trade Agreement (Figure 4.7) – – Promote economic growth the continent – Economic Community of West African States (ECOWAS) – Common Market for Eastern and Southern Africa (COMESA) – Southern African Development Community (SADC) 4-27 Figure 4.7 African Trade Agreements 4-28 Mercosur (Mercosul) • Mercosur (Mercosul) – Created in 1991 by the Treaty of Asuncion – Economic free trade area in South America modeled on the EU (Figure 4.8) 4-29 Figure 4.8 Regional Trade Agreements in Central America and South America 4-30 Other Regional Agreements • Central American Free Trade Agreement (CAFTA) – FTA among the United States and several Central American nations (Figure 4.8) • Andean Community (CAN) • ASIA-Pacific Economic Cooperation – Serves as a regional vehicle for promoting open trade and practical economic cooperation – South American fivenation trading bloc 4-31 The European Union (EU) • European Union – A body of 25 European countries dedicated to economic and political integration (Figure 4.9) – Romania and Bulgaria join in 2007, to move membership to 27 4-32 Figure 4.9 European Union: MemberNations and Candidate Nations 4-33 Institutions of The EU • European Parliament • European Commission – EU legislative body whose members are popularly elected from member-nations • Council of the European Union – Group that is the EU’s primary policy-setting institution – Institution that runs the EU’s day-to-day operations • European Court of Justice (ECJ) – Court that rules on issues related to EU policies 4-34 European Monetary Union (EMU) • European Monetary Union – Group that established use of euro in the 12country euro zone – The three countries from “old EU” that not participate are Denmark, Sweden, and the United Kingdom – Slovenia joins in 2007 – The single currency reduces the cost of doing business across EMU country borders 4-35 ... Describe the influence the mainly political international institutions have on international businesses and their relevance to international business  Identify the major organs of the United... Describe the major purpose and effectiveness of OPEC  Identify economic integration agreements and the effectiveness of the major ones  Discuss the impact of the EU and its future challenges... United Nations, their general purpose, and their significance to international business  Discuss the World Trade Organization and its predecessor, GATT  Appreciate the resources of the Organisation