Comilla University
Department of Marketing
Report On
Economic integration & co-operation
Prepared For
Mashiat Zahin
Lecturer, Department of Marketing
Comilla University
Prepared By
Md. Mosarof Hossain
ID: 11707011
Session: 2016-17
Department of Marketing
Comilla University
Submission Date: 27/09/2020
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Table of Content
Serial Topic Name Page
Number Number
1 The world trade organization 3-4
2 GATT 5-7
3 Regional economic integration 7-8
4 NAFTA 9-10
5 Regional economic integration in the 10-11
Americas
6 Regional economic integration in Asia 11-13
7 Commodity agreement 13-15
8 OPEC 15-16
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INTRODUCTION
World Trade Organization deals with the global rules of trade between nations. Its main
function is to ensure that global trade flows. In a nutshell, the World Trade Organization is an
international organization aiming to reduce all barriers to trade. It achieves this by acting as a
forum for countries to constantly re-negotiate to remove blocks they have on trade.
OBJECTIVES
1. To help developing countries benefit fully from global trading system.
2. To set & enforce rules for International trade.
3. To increase the transparency of decision making process.
4. To facilitate trade without any discrimination.
5. To resolve trade disputes
SCOPE
[Link] WTO shall provide the common institutional framework for the conduct of trade
relations among its members in matters related to the agreements and associated legal
instruments included in the Annexes.
2. The agreements and associated legal instruments of the Multilateral Trade Agreements are
binding on all members.
3. The agreements and associated legal instruments of the Plurilateral Trade Agreements (A
plurilateral agreement implies that WTO member countries would be given the choice to
agree to new rules on a voluntary basis.) are also a part of this agreement for those members
that have accepted them and are binding on them.
4. The general agreement on Tariff & Trade,1994 is legally distinct from the general
agreement on Tariff & Trade dated 30 October 1947
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Limitation of WTO:
i. The trade reform process is incomplete in many countries. For instance, some high
tariff still remain on which negotiations are still proceeding at various levels,
notably in the areas of basic telecommunications and financial services
ii. There appears to have been at least some reversals in the overall liberalization
process in some developing countries. Examples are of increasing anti-dumping
measures, selective tariff increases and investment related measures;
iii. The WTO has also not been sensitive enough to the development of non-tariff
barriers to imports from the UDCs, such as antidumping duties;
iv. The interests of international trade, which are primarily the interests of
transnational corporations, take precedence over local concerns and policies even
if such a course exposes the local population to serious health and security risks.
Conclusion
Although continuing the future challenges, the shared international experience of sixty
years of the GATT/WTO is a positive story. Plenty of governments, non-state actors,
commentators and critics want to improve the system, but very few would oppose its core
contribution to a more stable and prosperous world. An exact look at the less than fully
resolved issues of the past, the outstanding challenges, and the successes will stimulate
thought on how best to manage the future
Reference
An introduction to the World Trade Organisation. (n.d.-a). Full Fact.
[Link]
organisation/#:%7E:text=In%20a%20nutshell%2C%20the%20World,blocks%20they
%20have%20on%20trade.
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Introduction of GATT
The General Agreement on Tariffs and Trade (GATT) is a legal agreement
between many countries, whose overall purpose was to promote international
trade by reducing or eliminating trade barriers such as tariffs or quotas.
Advantages:
i. Membership of WTO is a step towards globalisation with a potential of accelerated
economic growth and gains from trade and capital flows.
ii. Even though WTO commitments demand a country’s phased movement towards
liberalisation and globalisation, there is no harm per se in going this route; only, it should
proceed cautiously and judiciously. A developing country’s economy should be sufficiently
resilient and be ready to accept reforms if wants to grow and modernise.
iii. In addition to strengthening traditional export markets, membership of WTO provides a
better scope for exploring and developing new export markets and sources of inputs. This fact
is of special importance to developing countries because development of export markets
boosts growth multipliers.
Disadvantages
i. Conceptually, compatibility with WTO framework demands that the economy of a member
country should be primarily market-oriented. This limitation is particularly hard for
developing and poor countries which suffer from the ills of mass poverty and other similar
problems.
ii. A country seeking membership of WTO does not have the choice of seeing specific
components and opting out of the others.
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iii. A developing country can hope to derive optimum benefit from its membership of WTO
only by improving the performance of its economy because of the competitive environment
in which it has to operate. It has to adapt quickly in order to survive in open waters.
iv. A developing country has to deal with the man oeuvres of the corporate sector of the
developed countries. It must also face the reality that developed countries tend to pursue
double standards, and learn to cope as best it can with uneven playing fields.
Developed countries keep raising new issues for inclusion into agenda of negotiations and
these issues, instead of being advantageous to developing countries, are invariably
disadvantageous to them. In other words, poorer members of WTO have to be constantly on
the de The GATT is a Constitutional agreement like the Treaty. However, it adopts a different
set of economic goals than the Treaty.
CONCLUSION
The GATT is also an international agreement. However, it establishes a regulatory structure
which is different from that established by t Regional economic integration refers to efforts to
promote free and fair trade on a regional basis. ... Member countries remove all barriers to
trade between themselves, but are free to independently determine trade policies with
nonmember nations. Customs union provides for economic cooperationhe other international
agreements of the [Link] for safeguarding their interests.
Reference
Wikipedia contributors. (n.d.). General Agreement on Tariffs and Trade. Wikipedia.
[Link]
introduction
Regional economic integration refers to efforts to promote free and fair trade on a regional
basis. ... Member countries remove all barriers to trade between themselves, but are free to
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independently determine trade policies with nonmember nations. Customs union provides for
economic corporation
OBJECTIVES OF ECONOMIC INTEGRATION
[Link] pursue non-economic objectives such as strengthening political ties and managing migration
flows
[Link] ensure increased security of market access for smaller countries by forming regional trading
blocs with larger countries
[Link] improve members bargaining strength in multilateral trade negotiations or to protest against
the slow trade of pace negotiations.
[Link] promote regional infant industries which cannot be viable without a protected regional market.
Bariers of regional economic integration
[Link] diversion. The flip side to trade creation is trade diversion. ...
[Link] shifts and reductions. Countries may move production to cheaper labor markets in
member countries. ...
[Link] of national sovereignty.
conclusion
it can be stated that regional economic integration could pave way for its members to participate
more effectively in the multilateral process of economic change, by providing them with
opportunities to experiment with the economic change at a smaller scale and magnitude within the
region. This could contribute to their preparedness to the multilateral liberalization process at the
larger scale by contributing to their efficiency and competitiveness profiles through cooperation.
Thus, the recent attempts of regional integration by India and other Asian countries need to be
viewed against this understanding that RTAs are building blocks to the multilateral trading system.
Reference
Wikipedia contributors. (n.d.-b). Regional integration. Wikipedia.
[Link]
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introduction
On January 1, 1994, the North American Free Trade Agreement (NAFTA) between the United States,
Canada, and Mexico entered force to create a trilateral trading bloc in North America. The
agreement superseded the original Canada-United States Free Trade Agreement between the U.S.
and Canada. NAFTA seeks to liberalize restrictions on trade among the three countries. Since its
entry into force, NAFTA has eliminated most tariff and non-tariff barriers for trade and investment
between its three member countries. NAFTA aims to promote the conditions of free competition in
order to increase market access and investment opportunities within the free trade area.
Objectives of NAFTA
1. Eliminate barriers to trade in,
2. facilitate the cross-border movement of, goods and services between the territories of the
parties.
3. Promote conditions of fair competition in the free trade area.
4. Increase substantially investment opportunities in the territories of the parties.
problems
[Link] loss of these jobs is just the most visible tip of NAFTA's impact on the U.S. economy.
2. NAFTA has also contributed to rising income inequality
3. suppressed real wages for production workers
4. weakened workers' collective bargaining powers and ability to organize unions
5. reduced fringe benefits.
conclusion
Overall, the evidence suggests that Michigan's economy has reaped tremendous benefits as a result
of NAFTA trade liberalization. It is clear that Michigan's exports to Mexico and Canada have grown
faster after NAFTA than they did before the pact was signed. This can be seen in both MISER and U.
S. Department of Commerce data. For various reasons, the two sets of data differ for Michigan.
While the Department of Commerce data do not go back to 1988, they show that Michigan exports
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to the NAFTA nations since 1993 have exceeded those to the non-NAFTA nations by 62 percent to 42
percent.
Has NAFTA caused Michigan workers harm? We believe that many of the highly publicized "job
losses" trumpeted by newspaper headlines are actually attempts to blame NAFTA for general
business failures that would have occurred anyway. Some companies have been legitimately hurt by
the trade accord, however; the data showing impressive increases in exports suggests that many
more companies are benefiting
Reference
globalEDGE. (n.d.). NAFTA: Introduction >> globalEDGE: Your source for Global
Business Knowledge. [Link]
blocs/nafta#:%7E:text=On%20January%201%2C%201994%2C%20the,trading%20bl
oc%20in%20North%20America.&text=NAFTA%20seeks%20to%20liberalize%20res
trictions%20on%20trade%20among%20the%20three%20countries.
Regional economic integration in the Americas
Since the 1990s, trade integration has led to cooperation among Latin American and Caribbean
nations, which has in turn created trust, cross-border networks and demand for further openness.
These interactions have solidified alliances and spurred efforts to solve problems in areas as varied
as infrastructure projects, environmental protection, security and democratic governance.
●● Latin America and the Caribbean, however, are shifting toward a new form of regionalism, which
is recalibrating integration in the hemisphere.
●● The United States appears less enthusiastic about trade agreements, although recent free trade
agreements (FTAs) with Colombia and Panama are important steps forward. In addition, some
governments in Latin America, pressured by a public backlash against globalization, are turning their
backs on open trade policies.
●● On the other hand, 11 countries on the Pacific side of the Americas formed the Pacific Basin
Forum in 2007 and are working to unify their trade agreements. A smaller group called the Pacific
Alliance, composed of Mexico, Colombia, Chile and Peru, is accelerating the process of convergence
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to create a seamless accumulation of production, which would allow countries to import
intermediate goods from within the bloc while satisfying the rules of origin requirements.
●● The recent global economic downturn has accentuated the importance of trade and economic
integration as engines of growth and development in the Americas.
●● Exports have served as a countercyclical force in the region’s economies, propelling growth and
economic stability.
●● The region’s need for economic growth calls for closer trade integration and liberalization that
goes beyond trade agreements. Measures that facilitate doing business across borders, such as
improving customs, logistics and infrastructure, as well as building relationships with consumers in
foreign markets and multinational firms, are essential.
Reference
Regional Integration in the Americas: The Impact of the Global Economic Crisis. (n.d.).
Wilson Center. [Link]
americas-the-impact-the-global-economic-crisis
Introduction –regional economic integration in Asia
Regional economic integration in Asia is barely developed compared with North America and
Western Europe. Its recent track record is patchy: increasing integration is confined
pretty much to east Asia. Correspondingly, regional economic institutions are thin on the
ground, weak or embryonic. But changing realities in Asia and beyond are stirring initiatives
to spur regional economic integration. Do they make sense? And what are their prospects?
Geographically, this paper focuses on east and south Asia – globalised and globalising Asia.
It omits north and west Asia, which are much less globalised or non-globalised (except for
natural resources, notably oil). On issues, it covers trade, finance and monetary policy. More
attention is given to trade and foreign direct investment (FDI) and associated trade policies,
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where integration is more advanced and policies less restrictive than they are on financial
and exchange-rate mattersThis is the season for regional-integration initiatives in Asia. There is talk
of region-wide
FTAs, and there are east-Asian initiatives on financial and monetary cooperation. But grand
visions for Asian regional blocs are not achievable. Regional economic integration is most
developed in east Asia, but only because of manufacturing supply chains linked to global
markets.
South Asia is the most malintegrated region in the world. And east and south Asia are much
less integrated in finance than they are in trade and FDI – due to highly restrictive national
policies governing financial markets.
Asia’s existing FTAs are “trade light”. They are largely limited to tariff cuts, but have barely
tackled non-tariff regulatory barriers in goods, services and investment, and are bedevilled
by complex rules of origin requirements.
An APEC FTA initiative has gone nowhere – entirely predictable given such a large, heterogeneous
grouping. An east-Asian or a pan-Asian FTA, by discriminating against third
countries, would compromise regional production networks linked to global supply chains.
Moreover, huge economic gaps and enduring political differences will stymie Asian regional
integration for some time to come. As for regional monetary and financial cooperation, it is
embryonic, very soft and confined to east Asia.
Asian regional integration is not likely to come about through top-down regional policy initiatives.
The key to future regional and global integration is renewed unilateral, non-discriminatory
liberalisation, this time going beyond border barriers to tackle behind-the-border
regulatory barriers. That, more than anything else, would extend multinationals’ supply
chains in the region, and open up regional markets for domestic producers and consumers.
Asian regional institutions can be useful at the margin. They can be “chat forums” for policy
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dialogue and exchange of information, gradually improve mutual surveillance and transparency,
promote trade facilitation and “best-practice” measures, and (at best) cement unilateral
liberalisation and help to prevent its reversal in difficult times. But more ambitious regional
initiatives are inadvisable, indeed unachievable. Better, therefore, to be pragmatic and realistic –
and stick to terra firma.
This is the season for regional-integration initiatives in Asia. There is talk of region-wide
FTAs, and there are east-Asian initiatives on financial and monetary cooperation. But grand
visions for Asian regional blocs are not achievable. Regional economic integration is most
developed in east Asia, but only because of manufacturing supply chains linked to global
markets.
South Asia is the most malintegrated region in the world. And east and south Asia are much
less integrated in finance than they are in trade and FDI – due to highly restrictive national
policies governing financial markets.
Asia’s existing FTAs are “trade light”. They are largely limited to tariff cuts, but have barely
tackled non-tariff regulatory barriers in goods, services and investment, and are bedevilled
by complex rules of origin requirements.
An APEC FTA initiative has gone nowhere – entirely predictable given such a large, heterogeneous
grouping. An east-Asian or a pan-Asian FTA, by discriminating against third
countries, would compromise regional production networks linked to global supply chains.
Moreover, huge economic gaps and enduring political differences will stymie Asian regional
integration for some time to come. As for regional monetary and financial cooperation, it is
embryonic, very soft and confined to east Asia.
Reference
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Rillo, A. D. (n.d.). Monitoring Regional Economic Integration in Asia. Asian Development
Bank. [Link]
asia
Commodity agreements
Commodity agreements are arrangements between producing and consuming countries to stabilise
markets and raise average prices. Such agreements are common in many markets, including the
market for coffee, tea, and sugar.
Example – The International Cocoa Agreement
In 2003, an agreement was made between the seven main cocoa exporting countries, Cameroon,
Ivory Coast, Gabon, Ghana, Malaysia, Nigeria and Togo, and the main importing countries including
the EU members, Russia, and Switzerland. The main purpose of this agreement was to promote the
consumption and production of cocoa on a global basis as well as stabilise cocoa prices, which had
been falling steadily. The agreement was planned to continue until 2010, but in that year it was
decided to extend the agreement for a further two years, until 2012. In 2012 the signatories decided
on a further extension, until 2026.
Commodity agreements often involve intervention schemes, such as buffer stocks, and usually only
last for a few years, whereupon they are re-negotiated. They differ from cartels such as OPEC,
largely because discussions and negotiations involve both producer and consumer countries, unlike
cartels, which are established to protect the interest of producers only.
Market movements and price fluctuations are influenced by a number of factors, such as economic
reports, large institutional block trades and such like. Of all these factors, one that is often
underestimated is the impact of commodity prices. Fluctuating commodity prices not only have a
significant impact on business, they also impact the trading markets and the overall economy.
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Generally, the impact of commodity price fluctuations depends on whether that economy is a net
importer or net exporter of commodities.
For economies that are net importers, commodity price increases act almost like trade tariffs. This is
because it makes the import of raw materials and sources of energy, required for the everyday
functioning of different economic sectors, more expensive.
Economies that are net exporters, on the other hand, benefit from increasing prices, since their
income increases with the sale of those commodities. At the same time, a steep rise in prices could
reduce the demand for commodities and lead to losses.
Here’s a look at the effects of different commodities on a nation’s economy.
Gold
The price of gold not only impacts jewellers or retailers, who are dependent on the sales of gold-
related items. Gold is also used extensively in glass making; aerospace; medical products and other
sectors, so fluctuations in gold price can affect the entire market.
Gold also signifies the health of an economy. A country with a strong economy will attract more
investment in stocks and other financial instruments, rather than precious metals and other
commodities. But when the economy weakens, precious commodities are considered stable
investment options and attract more investors.
Cotton
Cotton is used in a large number of products. Rising prices can have a negative impact on retailers
and manufacturers of apparel and vice versa. Cotton is a key component in furniture, coffee filters
and other industries. With rising prices, companies have to increase the prices of their products or
absorb the rising cost, which would impact their profits. This will further affect the prices of all
dependent firms and their stocks.
Cash Crops
Wheat, Corn, Coffee and others are primary ingredients in many products. The producers of
products dependent on these crops will have to increase the prices of their products or have to
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absorb the losses, which will impact their margins and overall gains.
Commodity Prices and Inflation
Commodity prices are said to be a key indicator of inflation. Commodity prices respond quickly to
general economic shocks, such as increase in demand and global economic shocks, such as the
political tension in the Middle East. Systemic shocks, such as cyclones and floods that affect the
production and supply of agricultural commodities, can drive up the overall cost.
The direct relationship between commodity prices and inflation was strong in the 1970s. In the last
30 years, this dependency has become less important. Globalisation has increased the
interdependence of economies around the world. Today, an increase in commodity prices from a
strong dollar leads to domestic deflation.
Factors Impacting Commodity Prices in an Economy
There are three main reasons for fluctuations in commodity prices. Here’s a look at them.
Fundamental features of an economy. This deals with the supply and demand generation. If the
current supply and inventory of a commodity is more than the demand, it leads to oversupply and
decline in prices. On the other hand, if the demand is more than the supply, it drives up prices.
Technical condition of the market. Charts and other technical indicators influence the behavior of
traders, investors and other stakeholders in the market. Since a majority of market participants
depend on the same technical indicators, they tend to have similar buying or selling patterns, based
on these indicators, thus influencing prices.
Global political and macroeconomic conditions. Any economic, political or natural event can impact
commodity prices. For example, conflict in the Gulf region tends to increase oil prices, which affects
oil prices worldwide. Similarly, the US-China tariff war raises concerns worldwide and could impact
prices of various commodities.
There are a number of factors that impact market movements, of which commodities also have a
great impact on stocks, business, portfolios and the overall economy. When you are preparing to
invest in a particular sector, analyses the impact of commodities on that sector, it might prove
beneficial for your overall investment
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Reference Links
[Link]
[Link]
OPEC
The Organization of the Petroleum Exporting Countries (OPEC) is a group consisting of 14 of the
world's major oil-exporting nations. OPEC was founded in 1960 to coordinate the petroleum policies
of its members and to provide member states with technical and economic aid.
Main objectives of OPEC
In accordance with its Statute, the mission of the Organization of the Petroleum Exporting Countries
(OPEC) is to coordinate and unify the petroleum policies of its Member Countries and ensure the
stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum
to consumers,
OPEC's biggest problem
OPEC used to have a lot of spare capacity for oil reserves.
It has lost the ability to keep that capacity up, for a number of reasons.
This affects oil prices, and can cause unpredictability in the market.
For now, the oil market is set to tighten
Reference
Organization of the Petroleum Exporting Countries (OPEC). (n.d.). Investopedia.
[Link]
0of%20the%20Petroleum%20Exporting%20Countries%20(OPEC)%20is%20a,with%
20technical%20and%20economic%20aid.
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