EU Integration and Trade
58 Questions
12 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which type of economic integration involves the free movement of factors such as labor and capital, and the removal of physical, technical, and fiscal barriers?

  • Common Market (correct)
  • Free Trade Area
  • Preferential Trade Agreement
  • Custom Union

    • Which type of economic integration involves the adoption of a common external tariff on trade with non-members?

  • Preferential Trade Agreement
  • Custom Union (correct)
  • Common Market
  • Free Trade Area

    • Which organization is a free trade area and does not envisage political integration?

  • North American Free Trade Agreement
  • European Free Trade Association (correct)
  • European Union
  • Asia-Pacific Economic Cooperation

    • Which type of enterprises mainly drove international sourcing?

    <p>Manufacturing enterprises</p> Signup and view all the answers

    What was the main motivation for international sourcing?

    <p>To focus on core business</p> Signup and view all the answers

    What was the most common type of functions and services sourced abroad?

    <p>Administrative and management functions</p> Signup and view all the answers

    What is the effect of market integration on consumer welfare?

    <p>Consumers get better off</p> Signup and view all the answers

    What is the effect of a price rise on producers?

    <p>Producers get better off</p> Signup and view all the answers

    What is the net effect of the reduction of a constant tariff on imports?

    <p>Some agents in Home get better off while others get worse off</p> Signup and view all the answers

    What is the demand curve based on?

    <p>Marginal utility (MU)</p> Signup and view all the answers

    What is consumer surplus?

    <p>The triangle between demand curve and price paid</p> Signup and view all the answers

    What is producer surplus?

    <p>The triangle between marginal cost curve and price received</p> Signup and view all the answers

    What happens to consumer surplus when price rises?

    <p>It decreases</p> Signup and view all the answers

    What does the foreign supply curve look like for a small country?

    <p>It is a horizontal line</p> Signup and view all the answers

    What is the 'gravity model of trade'?

    <p>A model that explains the impact of distance and GDP on trade flows.</p> Signup and view all the answers

    What is the rationale for World Trade Organization (WTO) tariff-cutting negotiations?

    <p>To ensure that protections by all nations do not result in a worse-than-zero-sum game.</p> Signup and view all the answers

    What is the net change in welfare for a country that removes tariffs on a partner according to the text?

    <p>It is unclear whether the net change is positive or negative.</p> Signup and view all the answers

    What is the impact of EU economic integration on trade among member states according to the text?

    <p>It has pushed trade among member states.</p> Signup and view all the answers

    What is the main goal of a Regional Trade Agreement (RTA)?

    <p>To promote trade and investment between members</p> Signup and view all the answers

    What is the difference between a Free Trade Area (FTA) and a Common Market?

    <p>FTAs allow for free movement of factors of production, while Common Markets do not</p> Signup and view all the answers

    Which of the following is a characteristic of the European Union (EU)?

    <p>It coordinates economic policies</p> Signup and view all the answers

    What is the impact of EU integration on trade and welfare among EU-15 countries?

    <p>Trade increased by 70% and welfare by 3.1%</p> Signup and view all the answers

    What is the principle of 'Most Favoured Nation (MFN)' according to the World Trade Organization (WTO)?

    <p>The most favourable treatment granted to a product imported from any country should be given to a product from any Member of the WTO</p> Signup and view all the answers

    What is the Common Customs Tariff (CCT)?

    <p>A tariff applied to the import of goods across the external borders of the EU</p> Signup and view all the answers

    What are Technical Barriers to Trade (TBTs)?

    <p>Trade barriers that are frictional and include excessive red tape and industrial standards</p> Signup and view all the answers

    What is the objective of enterprises organizing their production globally and breaking up their value chains into smaller parts supplied by a growing number of providers located worldwide?

    <p>Improved production efficiency and competitiveness</p> Signup and view all the answers

    What are RTAs?

    <p>Reciprocal trade agreements between two or more partners</p> Signup and view all the answers

    What is the main criticism of preferential integration?

    <p>It limits global trade liberalization due to high external trade barriers</p> Signup and view all the answers

    What is the cornerstone of short run trade effects of economic integration?

    <p>Trade creation and trade diversion</p> Signup and view all the answers

    What are the four modes of supply under GATS?

    <p>Cross-border supply, consumption abroad, commercial presence, and presence of a natural person</p> Signup and view all the answers

    Which type of enterprises were mainly driving international sourcing according to the text?

    <p>Manufacturing enterprises</p> Signup and view all the answers

    What was the main factor influencing international sourcing according to the text?

    <p>Proximity</p> Signup and view all the answers

    What was the effect of international sourcing on employment according to the text?

    <p>Direct employment consequences were limited</p> Signup and view all the answers

    What is the net change in welfare for a country that removes tariffs on a partner according to the text?

    <p>Negative</p> Signup and view all the answers

    What is the rationale behind World Trade Organization (WTO) tariff-cutting negotiations according to the text?

    <p>To benefit all nations</p> Signup and view all the answers

    What are the two key variables that the geographical structure of trade flows depend on according to the text?

    <p>Distance between countries and size of the importer country</p> Signup and view all the answers

    What is the deep trade integration among EU-15 according to the text?

    <p>Trade integration among member states</p> Signup and view all the answers

    What is the main objective of Regional Trade Agreements (RTAs)?

    <p>To increase economic and political interdependence among member states</p> Signup and view all the answers

    Which of the following is a necessary condition for RTAs to be tolerated by the GATT under the MFN clause exception?

    <p>Intra-bloc tariffs must go to zero within a reasonable period</p> Signup and view all the answers

    What is the main criticism of preferential integration?

    <p>It limits global trade liberalization</p> Signup and view all the answers

    What are the four modes of supply under the General Agreement on Trade in Services (GATS)?

    <p>Cross-border supply, consumption abroad, commercial presence, and natural person presence</p> Signup and view all the answers

    What is the main difference between the European Union and the European Free Trade Association?

    <p>The European Union involves political integration while the European Free Trade Association does not</p> Signup and view all the answers

    What is the Common Customs Tariff (CCT)?

    <p>A tariff applied to the import of goods across the external borders of the EU</p> Signup and view all the answers

    What are Technical Barriers to Trade (TBTs)?

    <p>Trade barriers that are not based on rents, such as excessive 'red-tape' and industrial standards</p> Signup and view all the answers

    What is the objective of enterprises organizing their production globally and breaking up their value chains into smaller parts supplied by a growing number of providers located worldwide?

    <p>To improve production efficiency and competitiveness</p> Signup and view all the answers

    What is the impact of integration effects on trade shares among the EU-15 according to the text?

    <p>Increased by 70%</p> Signup and view all the answers

    What is the difference between consumer surplus and producer surplus?

    <p>Consumer surplus is the difference between marginal utility and price paid, while producer surplus is the difference between marginal cost and price received</p> Signup and view all the answers

    What is the impact of a price rise on consumer and producer surplus?

    <p>A price rise decreases consumer surplus and increases producer surplus</p> Signup and view all the answers

    What is the assumption made about Home country in the context of foreign supply?

    <p>Home country is a price taker, meaning that no matter it imports, the price is the same</p> Signup and view all the answers

    What is the impact of a tariff on imports imposed by Home country before integration with the Partner?

    <p>The tariff increases the price of imports from the Rest of the world (RoW) and decreases the quantity imported from RoW</p> Signup and view all the answers

    What is the difference between a Free Trade Area (FTA) and a Customs Union (CU)?

    <p>FTAs involve the removal of tariffs between member countries, while CUs involve the adoption of a common external tariff on trade with non-members.</p> Signup and view all the answers

    What is the impact of Preferential Trade Agreements (PTAs) on third countries?

    <p>PTAs can have both trade-creation and trade-diversion effects on third countries.</p> Signup and view all the answers

    What is the main principle of the World Trade Organization (WTO)?

    <p>Trade without discrimination</p> Signup and view all the answers

    What is the difference between a Common Market and an Economic Union?

    <p>A Common Market involves the free movement of factors such as labor and capital, and the removal of physical, technical, and fiscal barriers, while an Economic Union involves the coordination of economic policies in addition to the features of a Common Market.</p> Signup and view all the answers

    What is the impact of market integration on producer welfare?

    <p>Producers are better off</p> Signup and view all the answers

    What is the net effect on welfare in the Home country when a tariff is imposed on imports according to the text?

    <p>Some agents in Home get better off and some get worse off</p> Signup and view all the answers

    What is the demand curve based on according to the text?

    <p>Marginal utility</p> Signup and view all the answers

    What is the main focus of the text's 'welfare analysis' approach to the effects of market integration?

    <p>The effects on consumers</p> Signup and view all the answers

    Study Notes

    Economic Integration Types

    • Economic integration with free movement of labor and capital, alongside removal of various barriers, is termed full economic integration.
    • Customs Unions implement a common external tariff on trade with non-member countries.

    Trade Organizations

    • The European Free Trade Association (EFTA) is a free trade area that does not aim for political integration.

    International Sourcing

    • Multinational enterprises are the primary drivers behind international sourcing.
    • The main motivation for international sourcing is to achieve cost savings.
    • The most common functions and services sourced abroad include manufacturing and IT services.

    Market Integration Effects

    • Market integration generally enhances consumer welfare by increasing competition and variety.
    • A price rise typically results in decreased consumer surplus and can enhance producer surplus due to higher earnings.
    • The net effect of reducing a constant tariff on imports is often an increase in import volume and trade creation.

    Demand and Surplus

    • The demand curve is based on the relationship between price and quantity demanded, sloping downwards.
    • Consumer surplus represents the difference between what consumers are willing to pay and what they actually pay.
    • Producer surplus is the difference between what producers receive for their goods and their minimum acceptable price.
    • An increase in price usually leads to a loss of consumer surplus but may increase producer surplus.

    Supply Dynamics

    • The foreign supply curve for a small country is typically perfectly elastic due to its limited market power.
    • The gravity model of trade explains trade volumes based on the economic sizes of countries and the distance between them.

    World Trade Organization (WTO) Dynamics

    • WTO tariff-cutting negotiations aim to reduce trade barriers among member countries to foster global trade.
    • A country removing tariffs on a partner potentially leads to a net welfare gain.

    EU Economic Integration

    • EU integration results in increased trade among member states, enhancing overall economic growth.
    • The main objective of a Regional Trade Agreement (RTA) is to promote trade between member countries by reducing tariffs.

    Free Trade Areas vs. Common Markets

    • A Free Trade Area (FTA) focuses on offering tariff-free access, while a Common Market allows for the free movement of goods, services, labor, and capital.
    • Characteristics of the European Union (EU) include political and economic integration, a customs union, and a single market.

    Poverty and Trade Barriers

    • The Most Favoured Nation (MFN) principle mandates that any trade advantages given to one trading partner must be extended to others.
    • The Common Customs Tariff (CCT) is a unified external tariff applied to imports from non-EU countries.
    • Technical Barriers to Trade (TBTs) can hinder trade by imposing regulations that may affect the marketability of products.

    Global Production and Value Chains

    • Enterprises often organize global production by breaking up value chains into smaller segments supplied by numerous providers worldwide.
    • RTAs are trade agreements between two or more countries to facilitate trade and economic cooperation.

    Integration Critiques

    • A main criticism of preferential integration is that it may lead to trade diversion rather than trade creation, potentially harming non-member countries.

    General Agreement on Trade in Services (GATS)

    • The four modes of supply under GATS include cross-border supply, consumption abroad, commercial presence, and presence of natural persons.

    EU Integration Impact

    • EU integration significantly influences trade shares among the EU-15 countries by increasing access to markets and enhancing economic cooperation.
    • The difference between consumer surplus and producer surplus lies in their definitions: consumer surplus reflects consumer benefit, while producer surplus reflects producer gain.

    Tariff Effects

    • A tariff on imports typically raises domestic prices, impacting both consumer and producer surplus, and can cause a welfare loss in the importing country.
    • The main principle of the World Trade Organization (WTO) is to promote and regulate international trade through agreements reinforcing fair competition.

    Economic Unions vs. Common Markets

    • An Economic Union goes beyond a common market by integrating economic policies and adopting shared regulations within member states.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge on the impact of EU integration on trade and welfare with this quiz based on the research of Julia Spornberger. Learn about the quantification of the border effect and the significant increase in trade shares and real income in the EU-15.

    More Like This

    International Economic Integration
    6 questions

    International Economic Integration

    CorrectSimile avatar
    CorrectSimile
    Economic Integration and Trade Agreements
    12 questions

    Economic Integration and Trade Agreements

    SustainableTheory avatar
    SustainableTheory
    Economic Integration and Liberalization
    12 questions

    Economic Integration and Liberalization

    SustainableTheory avatar
    SustainableTheory
    Types of Economic Integration
    24 questions

    Types of Economic Integration

    MarvelousEvergreenForest avatar
    MarvelousEvergreenForest
    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser