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27 Cards in this Set

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preferential trade arrangements
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.
Free Trade Area
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.
Customs union
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).
Common Market
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.
Economic union
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.
Duty-free zones or free economic zones
Areas set up to attract foreign investments by allowing raw materials and intermediate products duty free.
trade creation
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.
trade diversion
Occurs when lower-cost imports from outside the union are replaced by higher-cost imports from another union member. By itself, this reduces welfare.
Tariff factories
Direct investments made in a nation or other economic unit (such as a customs union) to avoid import tariffs.
European Union (EU)
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.
European Free Trade Association
he free trade area that was formed in 1960 by the United Kingdom, Austria, Denmark, Norway, Portugal, Sweden and Switzerland.
Trade deflection
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
European Economic Area
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.
North American Free Trade Agreement
the agreement to establish a free trade area among the United States, Canada and Mexico that came into existence on January 1, 1994.
Southern Common Market (Mercosur)
The South American Common Market formed by Argentina, Brazil, Paraguay and Uruguay in 1991.
Council of mutual Economic Assistance (CMEA or COMECON)
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.
State trading companies
the state organizations in centrally planned economies handling trade in specific product lines.
Centrally planned economies
Economies in which factors of production are owned by the government and prices are determined by government directives.
Bilateral agreements
Agreements between two nations regarding quantities and terms of specific trade transactions
bulk purchasing
An agreement to purchased a specified amount of commodity for a year or a number of years.
Central and Eastern European Countries (CEEC)
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.
Newly Independent states
Includes Armenia, Azerbajin, Belarus, Estonia, Georgia, Kazakhstan, the Kyrgz Republic, Latvia, Lithuania, Moldova, Russia, Tajikstan, Turkmenistan, Ukraine, and Uzbekistan
Commmonwealth of Independent Stantes (CIS)
The organization formed by most of the former soviet republics when the Soviet Union was disbanded at the end of 1991).
Central European Free Trade Association (CEFTA)
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)
Baltic States Free Trade Area (BFTA)
An agreement among the Baltic states of Estonia, Latvia and Lithuania setting up a free trade area among themselves.
Static effects
The effect on supply and demand, the trade creation or diversion, reducing or increasing welfare
Dynamic effects
INCREASED COMPETITION among bigger EOCONOMIES OF LARGE-SCALE PRODUCTION and STIMULUS TO INVESTMENT with the creation of tariff factories behind enemy lines.