Page 235 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

Unit 20 : Forms of Economic Cooperation

(ii) Successful economic union requires favorable conditions in all of the following areas EXCEPT: Notes
(a) economics. (b) politics.
(c) culture. (d) religious.
(e) geography.
(iii) The demise of the ............... was the result of economically stronger members not allowing
for the needs of the weaker ones.
(a) World Bank
(b) International Monetary Fund
(c) Latin American Free Trade Association (LAFTA)
(d) Council for Mutual Economic Assistance (COMECON).
(e) None of the above fits.
(iv) The ............... is the most basic economic integration and cooperation arrangement.
(a) free trade area (b) customs union
(c) common market (d) political union
(e) regional cooperation for development
(v) A(n) ............... provides its members with a mass market without barriers to impede the flow
of goods and services. This is a lower level stage of economic partnership.
(a) free trade area (b) customs union
(c) common market (d) political union
(e) regional cooperation for development
(vi) ............... is a comprehensive trade agreement among Canada, Mexico, and the United States
that creates one of the largest and richest markets in the world.
(a) MERCOSUR (b) NAFTA
(c) LAFTA (d) SETA
(e) USCANMEX
(vii) The comprehensive trade agreement that addresses doing business within North America is
appropriately named:
(a) MERCOSUR. (b) NAFTA.
(c) LAFTA. (d) SETA.
(e) USCANMEX.
20.5 Summary

• Economic cooperation is part of the more important process of international political cooperation.
Successful coordination of policies in the economic arena can strengthen political and national
security ties. Unfortunately, however, all too often the process of international economic
negotiation creates new sources of conflict and tensions as each participating country seeks to
impose its own preferences and judgments on the economic policies of the other governments.
In recent months some governments have resented U.S. pressures to pursue more stimulative
fiscal and monetary policies than they thought prudent, and they have complained about the
implicit threat of using the exchange rate as a weapon to force compliance with American
views. There is a danger that the process of international cooperation in macro-economic and
exchange rate management, despite its lofty aspirations, can be harmful politically as well as
economically. While economic coordination and negotiation can, under the right circumstances,
make a positive contribution to worldwide economic well-being, it is important not to exaggerate
the potential gains from such coordination nor to pursue it in ways that threaten broader political
harmony.

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