ch 3 global marketing environment

8/7/2019 Ch 3 Global Marketing Environment

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Marhana M. Anuar


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` The environment for world trade

` World trade organization (WTO)

` General Agreement on Tariffs and Trade

` Free Trade Areas` North American Free Trade Agreement (NAFTA)

` European Union (EU)

` Association of South East Asian Nations (ASEAN)


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` Developed in January 1, 1995

` Base in Geneva

` Objective of existence:

to provide a forum for trade-related negotiationsamong 150 members

Overcome trade disputes - WTO has a Dispute

Settlement Body (DSB)

WTO member nations meet annually to work onimproving world trade.


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` A treaty among nation whose governments agree

to promote trade among members.

` Involves with:

Liberalizing world trade merchandiseHandle trade disputes handled 300 trade

disputes

Examples of trade disputes: US,EU and Canada

vs. China. China imposed high tariffs on importedauto parts.


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` Is a mechanism that confers special treatment on

selected trading partners.

Free Trade Area

Customs UnionCommon Market

Economic Union


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` FTA is formed when two or more countries agree

to eliminate tariffs and otherbarriers that restrict

trade.

` Objective of FTA:` To have zero duties on goods that across borders

between the partners.


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` Members of customs union agree to establish a

common external tariffs (CETs) and quota system.


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` The next level of economic integration

` In addition to the removal of internal barriers to

trade and the establishment of common external

tariffs, the common market allows for freemovement of factors of production, including labor

and capital.


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` It seeks to coordinate and harmonize economic

and social policy within the union to facilitate the

free flow of capital, labor, and goods and services

from country to country.` A common place for goods, services and capital.

` Involves; unified central bank, single currency,

common policies on agriculture, social services,

regional development, taxation etc.


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` Agreement approved in 1994.

` A free trade area with population of 430 million

and GNI 14 trillion.

` Why NAFTA?` To promote economic growth through tariff

elimination and expanded trade and investment.

` Still no common external tariffs and restriction of

labor and other factor movements beeneliminated.


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` Established in 1967.

` Organization for economic, political, social, andcultural cooperation among its member countries.

` Member countries include Brunei, Indonesia,Malaysia, Philippines, Singapore, Thailand,Cambodia, Laos, Myanmar.

` Recently, Japan, China and Korea are addedcalled ASEAN plus three.

` Expanded to include Australia, New Zealand andIndia called ASEAN plus six.


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` ASEAN countries are active in regional and global

trade. ASEANs top trading partners are Japan, US,

the EU and China.

` A constant problem was the consensus among all

members.

` Although countries are geographically close, they

have historically been divided in many respects.

` In 1994, member nations agreed to implement ASEAN

Free Trade Area (AFTA), recent progress at reducing

intra-regional tariff reductions.


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` Is working on the establishment ofEast Asian

Community, with the first step being the

establishment of an East Asian Free Trade Area.

Singapore represents a special case among theASEAN nations, it has an extremely efficient

infrastructure and it is the worlds second-largest

container port.


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` The members include Belgium, France, Holland, Italy,

Luxembourg and West Germany.

` In 1973, add Great Britain, Denmark, and Ireland.

`

Then Greece (1981) and Spain and Portugal (1986).` In 1992, Finland, Sweden and Austria joined EU.

` In 2004, include Cyprus, Czech Republic, Estonia,

Hungary, Poland, Latvia, Lithuania, Malta, the Slovak

Republic, and Slovenia.

` In 2007, also include Bulgaria and Romania.


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` Objectives:

` To harmonize national laws and regulations so

that goods, services, people and eventually

money can flow freely across countries.` Citizens are now able to freely cross borders

within the union.


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` EU represent 490 million people and GNI of nearly

15 trillion.

` European Monetary System (EMS).

` EMS based on the European currency unit (ECU).` The single currency era began in January 1, 1999.

` Single currency provides benefits such as

eliminating costs associated with currency

conversion and exchange rate uncertainty.


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Thank you


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` 1. Explain the role of WTO.

` 2. Describe the similarities and differencesbetween a free trade area, a customs union, a

common market, and an economic union.

ch 3 global marketing environment

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