Assignment 6.1: Dialogue 6 — The Future of Trade Block Monetary Unions

Some of the world’s regional blocks represent not only the biggest markets but also the most vibrant economies. Considered as a single entity, the European Union’s (EU) economy is equivalent to a GDP of more than $12.2 trillion in 2005, using purchasing power parity. The GDP of NAFTA, even if NAFTA is “only” a preferential agreement block, was estimated at $15.1 trillion, and ASEAN’s was estimated at $2.2 trillion.

All three major blocks have been facing several significant obstacles, stemming from the attempt on aligning member states with different economies and industrial orientations. Moreover, these three blocks differ in their approaches on how the economic cooperation should be managed and achieved. While the EU is a single market in almost all legal aspects, NAFTA solely obliges its members to eliminate all tariffs on goods that meet the rules of origin test. Tariff removal differs by good and by sector according to agreements between each of the parties. The relevant category and staging for tariff elimination is set out in each country’s tariff schedule.

Procedure

1. Read the assigned readings and research Jones e-global library^®for economic information on NAFTA, ASEAN, and the EU. Among others, pay special attention to assigned Readings “Whatever Happened to the New American Continent?” and “Threat to EU Negotiations”.
2. Additionally, pay specific attention to prospects of future enlargements and the relationship with China.
3. By Wednesday evening, post to the Forum a substantive position paper in which you outline your view on the future development of NAFTA, ASEAN, and the EU. Answer the following questions:
   1. Do you expect further enlargement of NAFTA, ASEAN, and the EU? Why?
   2. How would you estimate the future economic and political relationship between China and ASEAN? Would you predict China becoming a member of ASEAN? Explain your responses.
   3. Is the world heading towards a globe of “competing regional blocks”? Why or why not?