Wark Mark

NAFTA and the EU are the key regional groups in which significant integration is taking place. In the future, these groups will continue to develop stronger linkages, and then they will expand to include other countries. The key for NAFTA will be whether or not the U.S. Congress can avoid getting caught up in protectionist sentiment and allow expansion to take place. If it does not, Canada and Mexico will continue to engage in bilateral agreements with non-NAFTA countries in the region along the lines of the NAFTA agreement. The EU will continue to expand east until it meets Russia, and then its expansion will stop. Regional integration in Africa will continue at a slow pace due to the existing political and economic problems there, but Asian integration, primarily in APEC, will pick up steam as the economies of east and Southeast Asia recover and open up. However, the key to their growth will continue to be non-APEC members Japan and the United States.

Case Study

Comercial Mexicana SA (Comerci), one of Mexico’s largest retail chains, is faced with a serious dilemma. Since Wal-Mart’s aggressive entry into the Mexican retail market, Comerci has found it increasingly difficult to remain competitive. Wal-Mart’s strong operating presence and low prices since NAFTA’s lifting of tariffs have put pressure on Comerci, and now management must decide if it can improve Comerci’s competitive position by remaining independent or by merging with either a local or foreign retailer. What has caused this intense competitive pressure on Comerci, and what is likely to be its future? Mexico’s retail sector has benefited greatly from the increasing trade liberalization the government has been pushing. After decades of protectionism, Mexico joined GAD in 1986 to help open its economy to new markets. In 1990, with Mexico’s economy on the upswing and additional free trade negotiations with the United States and Canada taking place, the founder of Wal-Mart, Sam Walton, met with the...