REGIONAL FREE TRADE ZONES
Certain countries have formed free trade zones or economic communities—groups of
nations organized to work toward common goals in the regulation of international
trade. One such community is the European Union (EU). Formed in 1957, the Euro-
pean Union set out to create a single European market by reducing barriers to the free
flow of products, services, finances, and labor among member countries and devel-
oping policies on trade with nonmember nations. Today, the European Union is us-
ing a common currency, the euro monetary system. In 1998, 11 participating countries
locked their exchange rates together, as a first step in a multiyear plan for a common
currency (Britain, Denmark, and Sweden are the holdouts, so far). The euro coins and
bills that will eventually replace member countries’ currencies will not be in circula-
tion until 2002, and businesses and private citizens will not be required to switch be-
fore then.
Today, the European Union represents one of the world’s single largest markets.
Its 15 member countries contain more than 370 million consumers and account for
20 percent of the world’s exports. As more European nations seek admission to the
EU in the twenty-first century, it could contain as many as 450 million people in 28
countries.
European unification offers tremendous trade opportunities for U.S. and other non-
European firms. However, it also poses threats. As a result of increased unification,
chapter 12
Designing
Global Market
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