Cross-National Cooperation and Agreements Essay

5876 Words Mar 2nd, 2014 24 Pages
Chapter EIGHT


• To profile the World Trade Organization
• To discuss the pros and cons of global, bilateral, and regional integration
• To describe the static and dynamic effects and the trade creation and diversion effects of bilateral and regional economic integration
• To define different forms of regional economic integration
• To present different regional trading groups, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), and Asia-Pacific Economic Cooperation (APEC)
• To describe the rationale for and success of commodity agreements

Chapter Overview

Regional economic integration represents a relatively new phenomenon in the
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Prior to 2002 Toyota had not posted a profit in Europe for more than three decades. However, during that time there was an agreement in effect between the Japanese government and the then European Community to severely limit the number of Japanese vehicles that could be exported to Europe. When the quota system and other restrictions were lifted in 1999, Toyota responded by establishing a European Design and Development center in southern France and capturing distinct cost advantages by setting up additional production centers in East Europe. Toyota’s European market share and profitability began to grow steadily, as Europeans became less loyal to their own regional brands in their search for more economical, higher quality cars. In fact, in 2005 Toyota’s environmentally friendly hybrid vehicle, the Prius, was voted European Car of the Year.

Teaching Tips: Carefully review the PowerPoint slides for Chapter Eight. Also, review the corresponding video clip, “European Union” [12:00].

I. INTRODUCTION Trade blocs are a significant influence on the strategies of MNEs because they define the size of regional markets and the rules by which companies must operate. Economic integration represents an agreement between or among nations within a geographic region, i.e., an economic bloc, to reduce and ultimately remove within the bloc tariff and nontariff barriers to the free flow of products, capital, and labor. Approaches to economic

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