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- The Global Trade Environment -
North America Latin America Asia-Pacific Europe
Middle East Africa
Sandra Creus Katharina Niehoff
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Definitions
North America Latin America Asia-Pacific Europe
Middle East Africa

• Preferential Trade Agreements Confers special
  treatment on
• selected trading partners
• Free Trade Area Two or more countries eliminate
  tariffs and
• other barriers using the Rules of origin
• Customs Union Establishment of common external
  tariffs
• (CETs)
• Common Markets Free movement of labor, capital
  and
• information
• Economic Union Coordination and Harmonization
  of economical
• and social policies

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Forms of trade negotiations
North America Latin America Asia-Pacific Europe
Middle East Africa

• Global agreements like the World Trade
  Organization (WTO)
• Bilateral arrangements ( USA and Chile)
• Regional arrangements like the Free Trade Area
  of the Americans (FTAA)

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The World Trade Organization / GATT
North America Latin America Asia-Pacific Europe
Middle East Africa

• 1947 foundation of the General Agreement on
  Tariffs and Trade ( GATT)
• GATT should promote trade among members by
  liberalizing world mercandise trade
• But it had no enforcement power

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The World Trade Organization
North America Latin America Asia-Pacific Europe
Middle East Africa

• 1.1.1995 Foundation of WTO
• 147 Members meeting annually
• Serve as mediatiors in global trade disputes
• Goal further reduction of trade barriers
• Can authorize trade sanctions

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North America
North America Latin America Asia-Pacific Europe
Middle East Africa

• 1988 U.S. Canada Free Trade Agreement ( CFTA)
• 1992 U.S., Canada Mexico signed North
  American Free Trade
• Trade Agreement (NAFTA) to promote economic
  growth through
• tariff elimination and expanded trade and
  investment
• But does leave the door open for
  discretionalry protectionism

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Latin America
North America Latin America Asia-Pacific Europe
Middle East Africa

• Including Caribbean, Central and South America
• The four most important trading arrangements
  are
• - Central American Integration System (SICA)
• - Andean Community
• - Common Market of the South (Mercosur)
• - Caribbean Community and Common Market
  (CARICOM)

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SICA
North America Latin America Asia-Pacific Europe
Middle East Africa

• 1991 Guatemala, El Salvador, Honduras,
  Nicaragua and Costa Rica
• establish the Contral American Common Market
  (CACM)
• 1997 With Panama they form the Central American
  Integration
• System (Sistema de la Integración
  Centroamericana / SICA)
• Headquartered in Guatemala City
• Common rules of origin, freer movement of goods,
  common external
• tariff

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Andean Community
North America Latin America Asia-Pacific Europe
Middle East Africa

• Formally Andean Pact
• Formed in 1969 to accelerate development of
  Venezuela, Colombia,
• Ecuador, Peru and Bolivia
• lower tariffs on intra-group trade, foreign
  goods are kept out,
• abolishment of all foreign exchange, financial
  and fiscal incentives and
• export subsidies, common external tariffs lead
  to a true customs union

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Mercosur
North America Latin America Asia-Pacific Europe
Middle East Africa

• 1991 Argentina, Brazil, Paraguay and Uruguay
  formed the Common
• Market of the South (Mercado Comun del Sur /
  Mercosur)
• Internal tariffs were eliminated and Common
  external tariffs agreed
• There are exceptions caused by a lack of
  economic and political
• discipline and responsibility
• 1996 Chile became an associate member which
  means a participation
• in the free-trade-area but not in the customs
  union
• Today Bolivia is an associate member too.

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CARICOM
North America Latin America Asia-Pacific Europe
Middle East Africa

• 1965 foundation of Caribbean Free Trade
  Association (CARIFTA)
• 1973 replacement through the Caribbean Free
  Trade Association
• (Caribbean Community and Common Market /
  CARICOM)
• 15 members Antigua, Barbuda, Bahamas, Barbados,
  Belize,
• Dominica, Grenada, Guyana, Haiti, Jamaica,
  Montserrat, St. Kitts,
• Nevis, St. Lucia, St. Vincent, Grenadines,
  Trinidad and Tobago
• Aims deepening the economic integration and
  create a common
• market
• 1991 rules of origin, customs union with common
  external tariffs
• 1998 economic union with a common currency

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ASEAN
North America Latin America Asia-Pacific Europe
Middle East Africa

• Association of Southeast Asian Nations (ASEAN)
  was founded in
• 1967 from Brunei, Indonesia, Malaysia, the
  Philippines, Singapore
• and Thailand
• 1995 Vietnam
• 1997 Cambodia and Laos
• 1998 Burma (Myanmar)
• Aim Organization for economic, political,
  social and cultural
• cooperation
• They are active (individually and collectively)
  in regional and global
• trade (USA, the European Union and China).

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WESTERN, CENTRAL AND EASTERN EUROPE
North America Latin America Asia-Pacific Europe
Middle East Africa

• The WE countries are among the most prosperous in
  the world.

The European Union (EU)

• 1958 Treaty of Rome. European Community (6
  members).
• Belgium, France, Holland, Italy, Luxembourg and
  West German
• 1973 Great Britain, Denmark, and
  Ireland 1981 Greece
• 1986 Spain and Portugal
• 1987 EC members created an economic union
  (single market in goods, services, and capital)

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The European Union (EU)

• Objective Harmonize national laws and
  regulations so that goods,
• services, people and money can flow freely across
  national boundaries.
• EU Continuous growing
• 1991Czechoslovakia, Hungary and Poland became
• associate members (E. Agreements)
• 1995 Finland, Sweden and Austria
• 2004 Cyprus, the Czech Republic, Estonia,
  Hungary, Poland, Latvia, Lithuania, Malta, the
  Slovak Republic and Slovenia became full
  members.

North America Latin America Asia-Pacific Europe
Middle East Africa
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The European Union (EU)

• Today 25 nations of EU represents 458million
  people and a combined GNP of 8.8 trillion.
• Currency
• 1979-1999 a European Monetary System was create
  (in form of checks and electronically in
  computers).
• 1991 Maastricht Treaty to create an EMU
  (European central banc and a single European
  currency, the Euro)
• 1998 Austria, Belgium, Finland, Ireland, The
  Netherlands France, France, Germany, Italy,
  Luxembourg, Portugal and Spain became the 11
  members
• 2001Greece became the 12th member.
• 2002 those 12 members started to use the Euro

North America Latin America Asia-Pacific Europe
Middle East Africa
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EFTA and EEA
EFTA The European Free Trade Area
North America Latin America Asia-Pacific Europe
Middle East Africa
EEA And European Economic Area

• Since 1991 has conclude more than 20 trade pacts
  with other nations
• 1991 EFTA reached agreement on the creation of
  the EEA that began in 1993.
• The ultimate goal is to achieve the free
  movement of goods, sevices, capital and labor
  between the two groups.
• EEA is a free trade area, not a customs union
  with common external tariffs.

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Marketing Issues in the European Union

• The EC establishes directives and sets deadlines
  for their implementation by legislation in
  individual nations.
• 1992 Marketing Mix
• Developing strategies to make advantage of
  opportunities
• Corporations
• Harmonization of laws and flexibility in the
  placement of factories.

North America Latin America Asia-Pacific Europe
Middle East Africa
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The Lome Convention and the Cotonou Agreement

• EU Maintains an accord with 71 countries in
  Africa, Caribbean, and the Pacific (ACP)
• The Lome Convention took effect 1975
• Designed to promote trade and provide poor
  countries with financial assistance from the
  European Development Fund.
• The have a preferential access to EU (for
  commodities as sugar, bananas rum and rice)
• The convention expire in 2000
• 2000 they sign new 20-year pact ( Cotonou
  Agreement)
• Cuba wants to become part of them ( better prices
  for sugar export ) and also is interested in
  joining CARICOM.

North America Latin America Asia-Pacific Europe
Middle East Africa
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Central European Free Trade Association (CEFTA)

• CEFTA, 1992 by Hungary, Poland, Czech Republic
  and Slovakia. Now Slovenia is also a member.
• They could join to the EU as a group. Meanwhile,
  within the Commonwealth of Independent State.
• Markets of Central and Eastern Europe present
  interesting opportunities and challenges
  (important new source of growth, the direct
  investment is on the rise, low-cost manufacturing
  for consumer products, distribution is a critical
  marketing mix element)
• High degree of standardization of marketing
  program elements. (Consumer companies target
  high-end segments of the market and focus on
  brand image and product quality. Industrial
  marketers opportunities to do business with the
  largest firms in a given country.)

North America Latin America Asia-Pacific Europe
Middle East Africa
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THE MIDDLE EAST

• Includes 16 countries
• Afghanistan, Bahrain, Cyprus, Egypt, Iran, Iraq,
  Israel, Jordan, Kuwait, Lebanon, Oman, Qatar,
  Saudi Arabia, Syria, The United Arab Emirates,
  and Yemen.
• Middle Eastern countries, mostly free, mostly
  unfree and repress.
• Middle East very different society types
• Business is driven by the price of oil
• Disparities contribute to political and social
  instability in the area
• The repercussions of Americans military action in
  2003 continue to be felt throughout the region.

North America Latin America Asia-Pacific Europe
Middle East Africa
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Cooperation Council for the Arab States of the
Gulf

• 1981 Gulf Cooperation Council (GCC)
• Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and
  the United Arab Emirates
• Had 45 of the worlds oil reserves/Production
  18 of the world oil output.
• Provides a means realizing coordination,
  integration, and cooperation in all economic,
  social and cultural affairs.
• Finance an economic cooperation agreement
  covering investment, petroleum the abolition of
  customs duties, harmonization of banking
  regulation and financial and monetary
  coordination.

North America Latin America Asia-Pacific Europe
Middle East Africa
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Cooperation Council for the Arab States of the
Gulf
North America Latin America Asia-Pacific Europe
Middle East Africa

• Coordinate trade development, industrial
  strategy, agricultural policy, and uniform
  petroleum policies and prices.
• Current goals include establishing an Arab common
  market and increasing trade ties with Asia.
• Is part of the three newer regional
  organizations, GCC, ACC, and AMU, will foster the
  development of inter Arab trade investment. (21
  Member states, constitution of unanimous
  decisions)
• ACC Arab Cooperation Council Egypt, Iraq,
  Jordan and North Yemen
• AMU Arab Maghreb Union Morocco, Algeria,
  Mauritania, Tunisia, and Libya

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Marketing Issues in the Middle East

• Connection is the key in conducting business
• Establishing personal report, mutual trust and
  respect are essentially the most important
  factors leading to a successful business
  relationship.
• Does business with the individual, not with the
  company and never by correspondence or telephone.
• Women are usually not part of the business or
  entertainment (Arab male-dominated society).

North America Latin America Asia-Pacific Europe
Middle East Africa
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AFRICA

• Continent of 11,7 million square miles
• Is not a single economic unit
• 54 nations divided into The Republic of South
  Africa, Nord
• Africa, and sub-Saharan or Black Africa.
• Average per capita income of less than 600

North America Latin America Asia-Pacific Europe
Middle East Africa
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ECOWAS
(Economic Community of West African States)

• Established in 1975 by 16 states.
• Object Promoting trade, cooperation and
  self-reliance in West Africa.
• Members Benin, Burkina Faso, Cape Verde, Cote
  DIvoire, The Gambia, Guinea, Guinea-Bissau,
  Liberia, Mali, Mauritania, Nigeria, Senegal,
  Sierra Leone, Togo.
• The economies of some of them are still
  experiencing political conflict and economic
  decline.

North America Latin America Asia-Pacific Europe
Middle East Africa
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East African Cooperation

• 1996 Kenya, Uganda, and Tanzania established a
  mechanism of free trade and economic integration.
• Kenya is the most developed of the three nations.

North America Latin America Asia-Pacific Europe
Middle East Africa
SADC
(Southern African Development Community)

• In 1992 to promote trade, cooperation, and
  economic integration
• Members Angola, Botswana, Democratic Republic
  of Congo (Zaire), Lesotho, Malawi, Mauritius,
  Mozambique, Namibia, South Africa, Seychelles,
  Swaziland, Tanzania, Zambia, and Zimbabwe. 1994
  South Africa.
• It represents 75 of the income / 86
  intra-regional exports