is a group of twenty seven countries that have eliminated trade barriers among

Is a group of twenty seven countries that have

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is a group of twenty-seven countries that have eliminated trade barriers among themselves (see the map in Figure 3.9 "The Nations of the European Union" ). 36. Association of European countries that joined together to eliminate trade barriers among themselves. Chapter 3 Business in a Global Environment 3.5 Reducing International Trade Barriers 162
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Figure 3.9 The Nations of the European Union At first glance, the EU looks similar to NAFTA. Both, for instance, allow unrestricted trade among member nations. But the provisions of the EU go beyond those of NAFTA in several important ways. Most importantly, the EU is more than a trading organization: it also enhances political and social cooperation and binds its members into a single entity with authority to require them to follow common rules and regulations. It is much like a federation of states with a weak central government, with the effect not only of eliminating internal barriers but also of enforcing common tariffs on trade from outside the EU. In addition, while NAFTA allows goods and services as well as capital to pass between borders, the EU also allows people to come and go freely: if you possess an EU passport, you can work in any EU nation. The Euro A key step toward unification occurred in 1999, when most (but not all) EU members agreed to abandon their own currencies and adopt a joint currency. The actual conversion occurred in 2002, when a common currency called the euro replaced the separate currencies of participating EU countries. The common currency facilitates trade and finance because exchange-rate differences no longer Chapter 3 Business in a Global Environment 3.5 Reducing International Trade Barriers 163
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complicate transactions.See “The Euro: The Basis for an Undeniable Competitive Advantage,” (accessed May 25, 2006). Its proponents argued that the EU would not only unite economically and politically distinct countries but also create an economic power that could compete against the dominant players in the global marketplace. Individually, each European country has limited economic power, but as a group, they could be an economic superpower.“Why the Euro?” European Commission, Economic, and Financial Affairs, (accessed August 26, 2011). But, over time, the value of the euro has been questioned. Just as is true with the United States today, many of the “euro” countries (Spain, Italy, Greece, Portugal, and Ireland in particular) have been financially irresponsible, piling up huge debts and experiencing high unemployment and problems in the housing market. But because these troubled countries share a common currency with the other “euro” countries, they are less able to correct their economic woes.“Paul Krugman: The Economic Failure of the Euro,” NPR (National Public Radio), January 25, 2011, - krugman-the-economic-failure-of-the-euro (accessed August 26, 2011). Many economists fear that the financial crisis precipitated by these financially irresponsible countries threaten the very survival of the euro.Willem Buiter, “Three
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