Course Hero Logo

Answer static effects are the shifting of resources

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 84 - 86 out of 89 pages.

Answer: Static effects are the shifting of resources from inefficient to efficient companies astrade barriers fall. Dynamic effects are the overall growth in the market and the impact on acompany of expanding production and achieving greater economies of scale. Static effects maydevelop when either of two conditions occurs:1.Trade creation: Production shifts to more efficient producers for reasons of comparativeadvantage, allowing consumers access to more goods at a lower price than would have beenpossible without integration.2.Trade diversion: Trade shifts to countries in the group at the expense of trade with countries notin the group, even though the nonmember company might be more efficient in the absence oftrade barriers.Dynamic effects of integration occur when trade barriers come down and the size of the marketincreases, allowing companies to achieve economies of scale.Diff: 3Learning Outcome: Discuss arguments for and against regional economic integrationSkill: Critical ThinkingObjective: 3AACSB: Analytical thinking93) What are the functions of the European Commission, the European Parliament, the Council,and the European Court of Justice?Answer:1.The European Commission provides the European Union’s political leadership and direction. Thecommission is composed of commissioners nominated by each member government andapproved by the European Parliament. It drafts laws that it submits to the European Parliamentand Council of the EU.2.The three major responsibilities of the European Parliament are: legislative power, control overthe budget, and supervision of executive decisions. The commission presents communitylegislation to the parliament. Parliament may approve legislation, amend it, or reject it outright.Parliament also approves the EU’s budget each year and monitors spending.
3.The Council is composed of the ministers of the member countries. The Council passes laws andmakes and enacts major policies. It works closely with the Commission and Parliament inadopting policies.4.The European Court of Justice ensures consistent interpretation and application of EU treaties.Member states, community institutions, or individuals and companies may bring cases to thecourt. The Court of Justice is an appeals court for individuals, firms, and organizations fined bythe commission for infringing treaty law. The Court of Justice is relevant to MNEs because itdeals mostly with economic matters.Diff: 3Skill: ApplicationObjective: 5AACSB: Analytical thinking94) What are the rules of origin and regional content provisions of NAFTA?Answer: Because NAFTA is a free trade agreement and not a customs union, each country setsits own tariffs for the rest of the world. Rules of origin ensure that only goods that have been thesubject of substantial economic activity within the free trade area are eligible for the more liberaltariff conditions created by NAFTA. According to regional content rules, at least 50 percent ofthe net cost of most products must come from the NAFTA region. The exceptions are 55 percentfor footwear, 62.5 percent for passenger automobiles and light trucks and the engines andtransmissions for such vehicles, and 60 percent for other vehicles and automotive parts.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 89 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
Indisheh saliminezhad

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture