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Read the excerpt below from Wall Street journal (9/6/02):

Read the excerpt below from Wall Street journal (9/6/02):

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Read the excerpt below from Wall Street journal (9/6/02):

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  1. Read the excerpt below from Wall Street journal (9/6/02): …Late yesterday in New York, the euro was trading around 99.32 cents, up from 99.15 cents late Wednesday but well off its high of 99.89 cents earlier yesterday. Against the yen, the dollar was worth 118.24 yen late yesterday, up from 118.00 yen Wednesday. In trading against the Swiss franc, the dollar was valued at 1.4707 francs yesterday, down from 1.4760 francs, while the British pound was worth $1.5675, up from $1.5643 Wednesday. Qs: • Is the exchange rate quote for the U.S. dollar a direct or indirect quote on the (a) yen? (b) euro? (c) Swiss franc? (d) sterling (British pound)? • (a) From Wednesday to Thursday, what percentage change in the value of the dollar occurred against the yen? (b) sterling (Remember to mind your quoted and base currencies!) • Using the euro as the base currency, what is Thursday’s cross rate between the yen and euro? • Using sterling as the base currency, what is Thursday’s cross rate between the Swiss franc and sterling?

  2. Regional Economic Integration Free Trade Area Customs Union Common Market Economic Union Political Union

  3. Greater Economic Integration Major Regional Trading Groups Free Trade Areas European Free Trade Association Central European Free Trade Agreement North American Free Trade Agreement Association of South East Asian Nations Customs Union MERCOSUR Common Market Caribbean Community and Common Market Central American Common Market Andean Group Economic Integration European Union

  4. Benefits of Regional Economic Integration

  5. Drawbacks of Regional Economic Integration

  6. Integration in Europe European Coal and Steel Community European Economic Community Single European Act Maastricht Treaty

  7. Structure of the European Union European Council European Commission Court of Justice Council of Ministers European Parliament

  8. United States - Canada Free Trade Agreement Integration in North America North American Free Trade Agreement (NAFTA)

  9. Latin American Free Trade Association (LAFTA) The Andean Community Pact Integration in Latin America Latin American Integration Association (ALADI) Southern Common Market (MERCOSUR)

  10. Central Americaand the Caribbean Caribbean Community and the Common Market (CARICOM) Central American Common Market (CACM)

  11. Proposed Trade Agreements Free Trade Area of the Americas (FTAA) Transatlantic Economic Partnership (TEP)

  12. Integration in Asia Association of Southeast Asian Nations (ASEAN) Asia Pacific Economic Cooperation (APEC)

  13. Integration in the Middle East and Africa Gulf Cooperation Council (GCC) Economic Community of West African States (ECOWAS)

  14. General Agreement on Tariffs and Trade (GATT) • Created in 1947 by 23 countries • Intended to negotiate reductions in trade restrictions and develop common procedures for handling imports and exports • Efforts led to a number of multilateral reductions in tariffs and nontariff barriers for member countries • across-the-board reductions • each country negotiated exceptions to its reductions • Codes of conduct developed in each of five areas • Inherent weakness of GATT • Cumbersome negotiations • Most-favored nation— trade concessions applied to all trading partners • No mechanism to assure compliance with negotiated agreements

  15. World Trade Organization (WTO) • Created in 1995 to replace GATT • Negotiating process • Ongoing negotiations about • restrictions on trade in services • nontariff barriers to trade • protection of intellectual-property rights • investment policies that affect trade • Granting of normal trade relations • Apply to WTO members • Eliminates the free-rider complaint raised during GATT negotiations • Certain exceptions recognized • Settlement of disputes • Clearly defined settlement mechanism • Sanctions may be applied to countries not complying with rulings

  16. Dealing with Governmental Trade Influences • When faced with import competition, companies may • Move production to a lower-cost country • Concentrate on market niches in which there is less international competition • Effect internal adjustments • Companies may require assistance of government to limit imports or open foreign markets • Governments deny some requests for assistance • companies attitudes differ toward protectionism • Companies likely to lose from protectionism • those that depend heavily on trade • those that have integrated production in different global locations • Companies likely to gain from protectionism have single or multidomestic production facilities

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