Econ 3 Chapter 7

Front 1

preferential trade arrangements

Back 1

the loosest form of economic integration; provides lower barriers to trade among participating nations than on trade wth non participating nations. An example is the British commonwealth Preference Scheme.

Front 2

Free Trade Area

Back 2

Removes all barriers on trade among members, but each nation retains its own barriers of trade with nonmembers. The best examples are teh EFTA, NAFTA, and Mercosur.

Front 3

Customs union

Back 3

Removes all barriers on trade among members and harmonizes trade policies toward the rest of the world. The best example is the European Union (EU).

Front 4

Common Market

Back 4

Removes all barriers on trade among memebers, harmonizes trade policies toward the rest of the world and also allows the free movement of labor and capital among member nations. An example is the European Union (EU) since January 1, 1993.

Front 5

Economic union

Back 5

Removes all barrer on trade among members, harmonizes trade policies toward the rest of the world, allows the free movement of labor and capital among member nations, and also harmonizes or unifiesthe monetary, fiscal and tax policies of its members.

Front 6

Duty-free zones or free economic zones

Back 6

Areas set up to attract foreign investments by allowing raw materials and intermediate products duty free.

Front 7

trade creation

Back 7

Occurs when some domestic production in a member of the customs union is replaced by lower-cost imports from another member nation. This increases welfare.

Front 8

trade diversion

Back 8

Occurs when lower-cost imports from outside the union are replaced by higher-cost imports from another union member. By itself, this reduces welfare.

Front 9

Tariff factories

Back 9

Direct investments made in a nation or other economic unit (such as a customs union) to avoid import tariffs.

Front 10

European Union (EU)

Back 10

The customs union formed by West Germany, France, Italy, Belgium, the Netherlands, and Luxembourg that started in 1958, and expanded to 15 nations when UK, Denmark and Ireland joined in 1973, Greece in 1981, Spain and Portugal in `986, and Austria, Finland and Sweden in 1995.

Front 11

European Free Trade Association

Back 11

he free trade area that was formed in 1960 by the United Kingdom, Austria, Denmark, Norway, Portugal, Sweden and Switzerland.

Front 12

Trade deflection

Back 12

the entry of imports from the rest of the world into the low-tariff memeber of a free trade area to avoid the higher tariffs of the other members

Front 13

European Economic Area

Back 13

the free trade area formed by the 12 members of the EU and 5 of the 7 members of the EFTA on January 1, 1994.

Front 14

North American Free Trade Agreement

Back 14

the agreement to establish a free trade area among the United States, Canada and Mexico that came into existence on January 1, 1994.

Front 15

Southern Common Market (Mercosur)

Back 15

The South American Common Market formed by Argentina, Brazil, Paraguay and Uruguay in 1991.

Front 16

Council of mutual Economic Assistance (CMEA or COMECON)

Back 16

the organization of Commmunist bloc nations formed by the Soviet Union in 1949 to divert trade from Western nations and achieve a greater degree of self-sufficiency among Communist nations.

Front 17

State trading companies

Back 17

the state organizations in centrally planned economies handling trade in specific product lines.

Front 18

Centrally planned economies

Back 18

Economies in which factors of production are owned by the government and prices are determined by government directives.

Front 19

Bilateral agreements

Back 19

Agreements between two nations regarding quantities and terms of specific trade transactions

Front 20

bulk purchasing

Back 20

An agreement to purchased a specified amount of commodity for a year or a number of years.

Front 21

Central and Eastern European Countries (CEEC)

Back 21

Includes Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, the Federalist Republic of Yugoslavia, Hungary, the former Yugoslav Republic (FYR), Macedonia, Poland, Romania, the Slovak Republic and Slovenia.

Front 22

Newly Independent states

Back 22

Includes Armenia, Azerbajin, Belarus, Estonia, Georgia, Kazakhstan, the Kyrgz Republic, Latvia, Lithuania, Moldova, Russia, Tajikstan, Turkmenistan, Ukraine, and Uzbekistan

Front 23

Commmonwealth of Independent Stantes (CIS)

Back 23

The organization formed by most of the former soviet republics when the Soviet Union was disbanded at the end of 1991).

Front 24

Central European Free Trade Association (CEFTA)

Back 24

The Agreement signed by Poland, Hungary, the Cech Republic and Slovakia in 1992 calling for the establishment of free trade qamong its members within ten years (anticipated for 1997)

Front 25

Baltic States Free Trade Area (BFTA)

Back 25

An agreement among the Baltic states of Estonia, Latvia and Lithuania setting up a free trade area among themselves.

Front 26

Static effects

Back 26

The effect on supply and demand, the trade creation or diversion, reducing or increasing welfare

Front 27

Dynamic effects

Back 27

INCREASED COMPETITION among bigger EOCONOMIES OF LARGE-SCALE PRODUCTION and STIMULUS TO INVESTMENT with the creation of tariff factories behind enemy lines.