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- The Global Trade Environment -

- The Global Trade Environment -. North America Latin America Asia-Pacific Europe Middle East Africa. Sandra Creus & Katharina Niehoff. Definitions. North America Latin America Asia-Pacific Europe Middle East Africa. Preferential Trade Agreements : Confers special treatment on

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- The Global Trade Environment -

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  1. - The Global Trade Environment - North America Latin America Asia-Pacific Europe Middle East Africa Sandra Creus & Katharina Niehoff

  2. Definitions North America Latin America Asia-Pacific Europe Middle East Africa • Preferential Trade Agreements: Confers special treatment on • selected trading partners • Free Trade Area: Two or more countries eliminate tariffs and • other barriers using the „Rules of origin“ • Customs Union: Establishment of common external tariffs • (CETs) • Common Markets: Free movement of labor, capital and • information • Economic Union: Coordination and Harmonization of economical • and social policies

  3. Forms of trade negotiations North America Latin America Asia-Pacific Europe Middle East Africa • Global agreements like the World Trade Organization (WTO) • Bilateral arrangements ( USA and Chile) • Regional arrangements like the Free Trade Area of the Americans (FTAA)

  4. The World Trade Organization / GATT North America Latin America Asia-Pacific Europe Middle East Africa • 1947: foundation of the General Agreement on Tariffs and Trade ( GATT) • GATT should promote trade among members by liberalizing world mercandise trade • But it had no enforcement power

  5. The World Trade Organization North America Latin America Asia-Pacific Europe Middle East Africa • 1.1.1995: Foundation of WTO • 147 Members meeting annually • Serve as mediatiors in global trade disputes • Goal: further reduction of trade barriers • Can authorize trade sanctions

  6. North America North America Latin America Asia-Pacific Europe Middle East Africa • 1988: U.S. – Canada Free Trade Agreement ( CFTA) • 1992: U.S., Canada & Mexico signed North American Free Trade • Trade Agreement (NAFTA) to promote economic growth through • tariff elimination and expanded trade and investment • But does leave the door open for discretionalry protectionism

  7. Latin America North America Latin America Asia-Pacific Europe Middle East Africa • Including Caribbean, Central and South America • The four most important trading arrangements are: • - Central American Integration System (SICA) • - Andean Community • - Common Market of the South (Mercosur) • - Caribbean Community and Common Market (CARICOM)

  8. SICA North America Latin America Asia-Pacific Europe Middle East Africa • 1991: Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica • establish the Contral American Common Market (CACM) • 1997: With Panama they form the Central American Integration • System (Sistema de la Integración Centroamericana / SICA) • Headquartered in Guatemala City • Common rules of origin, freer movement of goods, common external • tariff

  9. Andean Community North America Latin America Asia-Pacific Europe Middle East Africa • Formally Andean Pact • Formed in 1969 to accelerate development of Venezuela, Colombia, • Ecuador, Peru and Bolivia • lower tariffs on intra-group trade, foreign goods are kept out, • abolishment of all foreign exchange, financial and fiscal incentives and • export subsidies, common external tariffs lead to a true customs union

  10. Mercosur North America Latin America Asia-Pacific Europe Middle East Africa • 1991: Argentina, Brazil, Paraguay and Uruguay formed the Common • Market of the South (Mercado Comun del Sur / Mercosur) • Internal tariffs were eliminated and Common external tariffs agreed • There are exceptions caused by a lack of economic and political • discipline and responsibility • 1996: Chile became an associate member which means a participation • in the free-trade-area but not in the customs union • Today Bolivia is an associate member too.

  11. CARICOM North America Latin America Asia-Pacific Europe Middle East Africa • 1965: foundation of Caribbean Free Trade Association (CARIFTA) • 1973: replacement through the Caribbean Free Trade Association • (Caribbean Community and Common Market / CARICOM) • 15 members: Antigua, Barbuda, Bahamas, Barbados, Belize, • Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts, • Nevis, St. Lucia, St. Vincent, Grenadines, Trinidad and Tobago • Aims: deepening the economic integration and create a common • market • 1991: rules of origin, customs union with common external tariffs • 1998: economic union with a common currency

  12. ASEAN North America Latin America Asia-Pacific Europe Middle East Africa • Association of Southeast Asian Nations (ASEAN) was founded in • 1967 from Brunei, Indonesia, Malaysia, the Philippines, Singapore • and Thailand • 1995: Vietnam • 1997: Cambodia and Laos • 1998: Burma (Myanmar) • Aim: Organization for economic, political, social and cultural • cooperation • They are active (individually and collectively) in regional and global • trade (USA, the European Union and China).

  13. WESTERN, CENTRAL AND EASTERN EUROPE North America Latin America Asia-Pacific Europe Middle East Africa • The WE countries are among the most prosperous in the world. The European Union (EU) • 1958 Treaty of Rome. European Community (6 members). • Belgium, France, Holland, Italy, Luxembourg and West German • 1973 Great Britain, Denmark, and Ireland 1981 Greece • 1986 Spain and Portugal • 1987 EC members created an economic union (single market in goods, services, and capital)

  14. The European Union (EU) • Objective: Harmonize national laws and regulations so that goods, • services, people and money can flow freely across national boundaries. • EU Continuous growing: • 1991Czechoslovakia, Hungary and Poland became • associate members (E. Agreements) • 1995 Finland, Sweden and Austria • 2004 Cyprus, the Czech Republic, Estonia, Hungary, Poland, Latvia, Lithuania, Malta, the Slovak Republic and Slovenia became full members. North America Latin America Asia-Pacific Europe Middle East Africa

  15. The European Union (EU) • Today: 25 nations of EU represents 458million people and a combined GNP of $8.8 trillion. • Currency: • 1979-1999a European Monetary System was create (in form of checks and electronically in computers). • 1991 Maastricht Treaty to create an EMU (European central banc and a single European currency, the Euro) • 1998 Austria, Belgium, Finland, Ireland, The Netherlands France, France, Germany, Italy, Luxembourg, Portugal and Spain became the 11 members • 2001Greece became the 12th member. • 2002 those 12 membersstarted to use the Euro North America Latin America Asia-Pacific Europe Middle East Africa

  16. EFTA and EEA EFTA: The European Free Trade Area North America Latin America Asia-Pacific Europe Middle East Africa EEA: And European Economic Area • Since 1991 has conclude more than 20 trade pacts with other nations • 1991 EFTA reached agreement on the creation of the EEA that began in 1993. • The ultimate goal is to achieve the free movement of goods, sevices, capital and labor between the two groups. • EEA is a free trade area, not a customs union with common external tariffs.

  17. Marketing Issues in the European Union • The EC establishes directives and sets deadlines for their implementation by legislation in individual nations. • 1992 Marketing Mix • Developing strategies to make advantage of opportunities • Corporations • Harmonization of laws and flexibility in the placement of factories. North America Latin America Asia-Pacific Europe Middle East Africa

  18. TheLome Convention and the Cotonou Agreement • EU Maintains an accord with 71 countries in Africa, Caribbean, and the Pacific (ACP) • The Lome Convention took effect 1975 • Designed to promote trade and provide poor countries with financial assistance from the European Development Fund. • The have a preferential access to EU (for commodities as sugar, bananas rum and rice) • The convention expire in 2000 • 2000 they sign new 20-year pact ( Cotonou Agreement) • Cuba wants to become part of them ( better prices for sugar export ) and also is interested in joining CARICOM. North America Latin America Asia-Pacific Europe Middle East Africa

  19. Central European Free Trade Association (CEFTA) • CEFTA, 1992 by Hungary, Poland, Czech Republic and Slovakia. Now Slovenia is also a member. • They could join to the EU as a group. Meanwhile, within the Commonwealth of Independent State. • Markets of Central and Eastern Europe present interesting opportunities and challenges (important new source of growth, the direct investment is on the rise, low-cost manufacturing for consumer products, distribution is a critical marketing mix element) • High degree of standardization of marketing program elements. (Consumer companies: target high-end segments of the market and focus on brand image and product quality. Industrial marketers: opportunities to do business with the largest firms in a given country.) North America Latin America Asia-Pacific Europe Middle East Africa

  20. THE MIDDLE EAST • Includes 16 countries: • Afghanistan, Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, The United Arab Emirates, and Yemen. • Middle Eastern countries, mostly free, mostly unfree and repress. • Middle East very different society types • Business is driven by the price of oil • Disparities contribute to political and social instability in the area • The repercussions of Americans military action in 2003 continue to be felt throughout the region. North America Latin America Asia-Pacific Europe Middle East Africa

  21. Cooperation Council for the Arab States of the Gulf • 1981 Gulf Cooperation Council (GCC) • Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates • Had 45% of the world’s oil reserves/Production 18% of the world oil output. • Provides a means realizing coordination, integration, and cooperation in all economic, social and cultural affairs. • Finance an economic cooperation agreement covering investment, petroleum the abolition of customs duties, harmonization of banking regulation and financial and monetary coordination. North America Latin America Asia-Pacific Europe Middle East Africa

  22. Cooperation Council for the Arab States of the Gulf North America Latin America Asia-Pacific Europe Middle East Africa • Coordinate trade development, industrial strategy, agricultural policy, and uniform petroleum policies and prices. • Current goals include establishing an Arab common market and increasing trade ties with Asia. • Is part of the three newer regional organizations, GCC, ACC, and AMU, will foster the development of inter Arab trade investment. (21 Member states, constitution of unanimous decisions) • ACC: Arab Cooperation Council: Egypt, Iraq, Jordan and North Yemen • AMU: Arab Maghreb Union: Morocco, Algeria, Mauritania, Tunisia, and Libya

  23. Marketing Issues in the Middle East • Connection is the key in conducting business • Establishing personal report, mutual trust and respect are essentially the most important factors leading to a successful business relationship. • Does business with the individual, not with the company and never by correspondence or telephone. • Women are usually not part of the business or entertainment (Arab male-dominated society). North America Latin America Asia-Pacific Europe Middle East Africa

  24. AFRICA • Continent of 11,7 million square miles • Is not a single economic unit • 54 nations divided into: The Republic of South Africa, Nord • Africa, and sub-Saharan or Black Africa. • Average per capita income of less than $600 North America Latin America Asia-Pacific Europe Middle East Africa

  25. ECOWAS (Economic Community of West African States) • Established in 1975 by 16 states. • Object: Promoting trade, cooperation and self-reliance in West Africa. • Members: Benin, Burkina Faso, Cape Verde, Cote D’Ivoire, The Gambia, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Nigeria, Senegal, Sierra Leone, Togo. • The economies of some of them are still experiencing political conflict and economic decline. North America Latin America Asia-Pacific Europe Middle East Africa

  26. East African Cooperation • 1996 Kenya, Uganda, and Tanzania established a mechanism of free trade and economic integration. • Kenya is the most developed of the three nations. North America Latin America Asia-Pacific Europe Middle East Africa SADC (Southern African Development Community) • In 1992 to promote trade, cooperation, and economic integration • Members: Angola, Botswana, Democratic Republic of Congo (Zaire), Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Seychelles, Swaziland, Tanzania, Zambia, and Zimbabwe. 1994 South Africa. • It represents 75% of the income / 86% intra-regional exports

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