Landscape and Challenges of

International Business -
INTE60006A.
Dr. Gilbert K. Adarkwah, PhD., LLM., MSc., MA., BA
The game plan: Lecture, group work and presentations
Session # Name Student activities

1 Introduction Read assigned readings

2 Globalization: Measures, Challenges and Read assigned readings
Trends Start forming groups
3 Globalization: Nations in the Global Read assigned readings
Environment Start forming groups
4 International Trade: Institutions and Decide topics of blog entries by team (3
Regulations members per team). Join a team with the
same topic interest.
5 International Trade: Regional Economic Start of work for the first team blog entry
Integration + Presentation of narration
6 Financial Integration and Global Quick presentation of co-creation work
Governance
7 Midterm Exam Exam
Session 5. Regional
Economic Integration
RTAs (Excercise, 45 minutes)

In light of this week’s readings:

Benito, G.R.G., Naurla, B., Grogaard, B.(2003).
“Environmental influences on MNE subsidiary roles:
economic integration and the Nordic countries”, Journal of
International Business Studies, vol. 34, no. 5, p. 443-456
[Click here]
Frattiani, M. & Oh, C.H.(2009). “Expanding RTAs, trade
flows and the multinational enterprise”, Journal of
International Business Studies, vol. 40, no. 7, p. 1206-
1227 [Click here]
Please answer the following
questions:
1. What are regional trade agreements?
2. What are their impacts vis-a-vis WTO?
3. What are the implications of the WTO and
regional trade agreements to MNEs
4. As a business analyst, how do you assess
Brexit? aka leaving an RTA.

NB: Your answers should be based on the

readings
Agenda

1 Theories of regional integration

2 Different examples of regional agreements

3 Brexit

4 Next session

5 Next week
Trade policies
• Trade policy is a government's stance on international trade, or a
combination of laws and practices that affects imports and exports.
• It is a political decision on how the economy of a country should be
managed.
• Trade policies can include regulations, tariffs, and quotas.
• Some countries want to encourage more trade and pursue open trade
policies, while others want to restrict trade and set policies that protect
local industries from competition.
• Trade policies can have a number of benefits, including economic growth
or lower costs of goods.
Trade policy- Canada
Liberal trade regime.
No foreign exchange restrictions,
and import licenses are only
required for a limited number of
goods.
Imports are generally subject to
import duties

Canada’s inclusive approach to trade (inter

national.gc.ca)
Key definitions

• A treaty (an agreement according to international

A free-trade agreement
law) to form a free-trade area between the
(FTA)
cooperating states.

• Is the region encompassing a trade bloc whose

A free-trade area
member countries have signed a FTA.

• The key difference between customs unions and

free-trade areas is their approach to third parties.
• While a customs union requires all parties to
Customs unions establish and maintain identical external tariffs
with regard to trade with non-parties, parties to a
free-trade area are not subject to this
requirement.
A free-trade zone
Rules of Origin
• Rules of origin are the rules to attribute a country of origin to a product in order to
determine its "economic nationality
• In a free-trade area without harmonized external tariffs, to eliminate the risk of trade
deflection, parties will adopt a system of preferential rules of origin.

“Rules of origin means the specific

provisions, developed from principles
established by national legislation or
international agreements ("origin criteria"),
applied by a country to determine the origin
of goods;” cf  Annex K of Kyoto Convention
1. Theories of
regional integration
 Regional economic integration

• Regional economic integration is a process in which

two or more countries agree to eliminate economic
barriers, with the end goal of enhancing productivity
and achieving greater economic interdependence.
Regional economic integration
• Regional integration reveals both the renewal of the question of the
nation-state in a context of globalization and the diversity of state
structures at the global level.

• This renewal of regionalism in the context of globalization has led

to an analytical renewal.
Regional economic integration
• Contrary to this concept of the 1950s - archetypal theories of the
customs union (Viner, Meade) - regional integration does not only
concern trade:

• it concerns capital flows and labour flows, the establishment of

a common institutional environment or policy coordination
allowing the convergence of economies and the anchoring of
economic policies.
Integration
• Integration is the establishment of a common system of rules on the part of public
authorities vis-à-vis private players.

• The institutions are waiting for systems that will allow for the convergence of agents'
expectations. They stabilize and secure the environment, allowing credibility.

• Regional integration translates into transfers of sovereignty and conflict prevention

objectives.

• The convergence of economic interests is a means of overcoming political rivalries and

antagonisms.

• Transfers of sovereignty and the production of public goods at the regional level are a
response to the overflow of States in the context of globalization (creation of a regional
currency for example).
Regionalization comes in many forms:
• Regionalization comes in many forms:
• Economic union: coordination of economic or social policies
• Regional cooperation: cooperation projects set up by stakeholders
• Market integration: economic convergence
• Specific integration/value chains: international relations within networks or
companies
• Industrial clusters: agglomeration effects and interconnection infrastructures
within transnational territories
• Institutional integration: rule-making or transfer of sovereignty with institutional
structures
Multilateralism versus bilateralism

• Regionalization raises the question of multilateralism versus

bilateralism (again).
• The constitution of a limited number of integrated zones can
promote the consensus necessary for multilateralism. Regional
agreements are therefore often preconditions for multilateralism
(the NAFTA philosophy).
• Another debate concerns the form of multilateralism. Should
regional relations be diluted into more or less universal
multilateralism or should cooperative multilateralism be
implemented?
What are treaties?
NAFTA / US MEXCAN / CAMEXUS
•Built upon NAFTA.

•The North American Free Trade Agreement

(NAFTA) is a regional agreement between
the Government of Canada, the Government
of the United Mexican States and the
Government of the United States of America
to implement a free trade area.

•Not a customs union

The Agreement between the United States of America, the United Mexican
States, and Canada (USMCA) replaced NAFTA in 2020
EU
•An "economic and political association" of
27 countries: Germany, Austria, Belgium,
Bulgaria, Cyprus, Denmark, Spain,
Estonia, Finland, France, Greece,
Hungary, Ireland, Italy, Lithuania, Latvia,
Luxembourg, Malta, Netherlands, Poland,
Portugal, Czech Republic, Romania,
Croatia, Slovakia, Slovenia, and Sweden.

•Note: The United Kingdom withdrew from

the European Union on January 31, 2020.
EU
Objectives

The European Union has two objectives:

• To establish the foundations of a closer union between European peoples, to

protect peace, and to advance the political union

• To ensure, by a common action, the social and economic progress.

How does the EU work?

• The EU institutions are built upon treaties.

• The EU is not a state, but a supranational organization, with competencies

transferred by the European states.
• Europe is a free-trade area (total)
• Europe is a customs union
• It is a monetary union
(19 countries)
A free-trade zone
ECOWAS
 ECOWAS
• West African Economic and Monetary
Union (UEMOA)

• West African Monetary Zone

• Gambia (Founding Member)
• Ghana (Founding Member)
• Guinea (Founding Member)
• Liberia (Joined on 16 February
2010)[44][45]
• Nigeria (Founding Member)
• Sierra Leone (Founding Member)
The Association of South East Asian Nations (ASEAN)
The accession of ASEAN members from 1967 to 1999
Enlargement of ASEAN
The Southern Common Market (MERCOSUR)

As of 1 January 1995, a customs union (a free trade area with a common external tariff )
Brexit

Leaving a free trade area (see H-O-S

Leaving model)

Leaving Leaving a customs union

Leaving a jurisdiction in which you were

Leaving a top decider
 3. Brexit
The cost of Brexit to June 2022 | Centre for European Reform (cer.eu)
4. Next session
• Financial integration and global governance