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Geographic Supranational Trends & Economics of Trade
Keith L. White
Supranationalism
The efforts of three or more states to forge associations for common advantage and in pursuit of common goals
• International sanctions• From League of Nations to United Nations
The United Nations
Representation of countries
Why Trade?
• Increase productivity
• Improve standard of living
• Utilize resources
• ABSOLUTE VS. COMPARATIVE ADVANTAGE
Absolute Advantage
• A country can produce more of a given product (good or service) than another country using the same resources.
Comparative Advantage
• The production of a good or service can be produced at a relatively lower OPPORTUNITY COST.
• (David Ricardo) = everyone will be better off producing the products they produce relatively best.
• Basis for today’s international trade
Economic Free Trade
• Eliminate trade barriers (tariffs/trade quotas/restrictions)
• Border restrictions/check points• “Open skies” (airline routes)• Cost/benefits analysis• EU• NAFTA• Currency/Monetary consolidation? (Euro)• A Global Order?
Toward a European Union
• The Organization of the European Economic Community (OEEC)
• France proposed a union with six other states called the European Coal and Steel Community (ECSC)
• The ECSC through negotiations and agreement led to the formation of the Common Market (EEC)
• Expansion created the European Community (EC)
• In 1992, further expansion led to creation of the European Union (EU)
Regional Multinational Unions• Supranationalism elsewhere
– NAFTA—the North American Free Trade Agreement– CARICOM– South America’s MERCOSUR– ECOWAS– Today, new groups are forming in almost all parts of
the world• FTAA—Free Trade Area of the Americas
• Other forms of Supranationalism– NATO– Cultural unions– Political unions
THE CHANGING GLOBAL POLITICAL LANDSCAPE
Restricting International Trade
• Protective Tariffs
• Trade Import Quotas
• Limits (Cargo/Passengers/Flights/Ships)
• Inspections/Licenses/Fees/Permits
• Economic Boycotts and Trade Embargos
Protectionist Arguments in USA
• National Defense
• Infant Industry Protection/Competition
• Domestic Jobs (Labor Union Influences)
• Keep US$ at home!
• Reduce trade deficit (Balance of payments)
• Environmental Issues
Current Trade Issues of Globalization
• Labor abuse/work exploitation (children) / Human Rights
• Safety concerns
• Environmental/pollution issues
• Cultural diffusion
• Devolution
• Religious fundamentalism vs. the evils of capitalism and free market forces
A New World Order?
• Write down your thoughts regarding globalization: Describe briefly how you would benefit and how you might not benefit is the world went to ONE currency. (Have fun and name this new currency!)
• Use an economic cost/benefits analysis for a free trade world. (Hint: Who would benefit and who would have to pay the cost = would the benefit be more than the cost?)
Extra Effort/Commentary
• The World Is Flat: A Brief History of the Twenty-First Century Thomas L. Friedman
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