What Is Article 50?

Article 50 is a clause in the European Union’s (EU) Lisbon Treaty that outlines the steps to be taken by a country seeking to leave the bloc voluntarily. Invoking Article 50 kick-starts the formal exit process and allows countries to officially declare their intention to leave the EU. The United Kingdom was the first country to invoke Article 50 after a majority of British voters elected to leave the union in 2016.

How Article 50 Works

Article 50 is part of the Lisbon Treaty, which was signed and ratified by all 27 member states of the European Union in 2007 and came into effect in 2009. The article outlines how a member nation may leave the EU voluntarily. As noted above, the article states: “Any member state may decide to withdraw from the union in accordance with its own constitutional requirements.”

According to the article’s text:

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.
   A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

Special Considerations

Article 50 became a subject of serious discussion during the European sovereign debt crisis of 2010 to 2014 when Greece’s economy appeared to be spiraling out of control. In an attempt to save the euro and perhaps the EU from collapsing, leaders considered expelling Greece from the eurozone.

The problem they encountered with Article 50 was that there was no clear guidance for pushing a member state out against its will. Nor was it necessary to remove Greece from the EU—just from the eurozone. Greece was eventually able to reach agreements with its EU creditors.

Origins of Article 50

The European Union began in 1957 as the European Economic Community, which was created to foster economic interdependence among its members in the aftermath of World War II. The original bloc comprised six European countries: the Netherlands, France, Belgium, West Germany, Luxembourg, and Italy. They were joined by the U.K., Denmark, and Ireland in 1973. The EU was formally created by the Maastricht Treaty in 1992, and by 1995 the bloc expanded to 15 members covering the whole of Western Europe. From 2004 to 2007, the EU experienced its largest-ever expansion, taking on 12 new members that included former Communist states.

The Lisbon Treaty was drafted with a view to enhancing the efficiency and democratic legitimacy of the Union and to improving the coherence of its action. The treaty was signed and ratified by all 27 member states in 2007 and came into effect in 2009. The treaty is divided into two parts—the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU). It has 358 articles in total including Article 50.

The author of the provision did not originally see it as being necessary. “If you stopped paying the bills and you stopped turning up at the meetings, in due course your friends would notice that you seemed to have left,” the Scottish peer Lord Kerr of Kinlochard told the BBC in November 2016. He saw Article 50 as being potentially useful in the event of a coup, which would lead the EU to suspend the affected country’s membership: “I thought that at that point the dictator in question might be so cross that he’d say ‘right, I’m off’ and it would be good to have a procedure under which he could leave.”

Example of Article 50

The first country to invoke Article 50 was the United Kingdom, which left the EU on Jan. 31, 2020. It came after a majority of British citizens voted to leave the union and pursue Brexit in a referendum on June 23, 2016, leading British Prime Minister Theresa May to invoke the article on March 29, 2017.

The process was mired by missed deadlines, extensions, negotiations, and stumbling blocks put forth by both British and EU leaders. May’s attempts for an agreement were rejected by parliament. Negotiations were renewed by Boris Johnson, who became prime minister after May resigned.

The country began an 11-month transition period immediately after its departure from the bloc. After leaving the Union, there were no British officials in the European Parliament, and the U.K. lost its veto right within the EU. But the two parties still had to work out a new trade agreement. There were still many issues to resolve during the transition period, including:

• Issues related to pensions
• How both parties would handle law enforcement and security cooperation
• Access to shared fisheries
• Customs and border controls between Northern Ireland and the Republic of Ireland
• Tariffs and other trade barriers

One big cause for concern was the issue of EU nationals migrating to the U.K. or vice versa. Prior to Brexit, an estimated three million EU nationals lived, worked, or studied in the U.K., while one million U.K. nationals did the same in the rest of the EU. Nationals were allowed to cross borders during the transition period but were afterward subject to visa requirements.

Negotiations continued during the transition period, despite many halts and roadblocks. On Dec. 24, 2020, the two sides finally announced a trade deal that would replace the EU’s single market and its customs union with respect to the United Kingdom. The EU-UK Trade and Cooperation Agreement was signed on Dec. 30 and provisionally entered force on Jan. 1. However, it was not fully ratified until the following April. The new trade agreement fully entered force on May 1, 2021.

What Is the Asia-Pacific Economic Cooperation (APEC)?

The Asia-Pacific Economic Cooperation (APEC) is an economic group of 21 members, formed in 1989, with the primary goal of promoting free trade and sustainable development in the Pacific Rim economies.

Understanding the Asia-Pacific Economic Cooperation (APEC)

APEC’s principal goal is to ensure that goods, services, capital, and labor can move easily across borders. This includes increasing custom efficiency at borders, encouraging favorable business climates within member economies, and harmonizing regulations and policies across the region.

The creation of APEC was primarily in response to the increasing interdependence of Asia-Pacific economies. The formation of APEC was part of the proliferation of regional economic blocs in the late 20th century, such as the European Union (EU) and the (now-defunct) North American Free Trade Agreement (NAFTA).

Nations Comprising APEC

The founding members of APEC were Australia, Brunei, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the U.S. Since its launch, China, Hong Kong, Taiwan, Mexico, Papua New Guinea, Chile, Peru, Russia, and Vietnam have joined its ranks.

APEC refers to its members as economies rather than as states due to the focus on trade and economic issues rather than the sometimes delicate diplomatic issues of the region, including the status of Taiwan and Hong Kong. The People’s Republic of China (PRC) refuses to recognize Taiwan because it claims the island as a province under its constitution. Hong Kong, meanwhile, functions as semi-autonomous regions of China and not a sovereign state.

Official observers of APEC include the Association of Southeast Asian Nations (ASEAN), the Pacific Economic Cooperation Council (PECC), and the Pacific Islands Forum (PIF).

The Asia-Pacific Economic Cooperation’s (APEC) Actions and Goals

At a landmark summit meeting in 1994, APEC announced a lofty goal of establishing free trade and investment regimes in the Asia-Pacific region by 2010 for members with developed economies. The group hoped to achieve those same goals for its developing economy members by 2020.

In 1995, APEC adopted the Osaka Action Agenda, a program designed to facilitate business activities, liberalize trade and investment and promote economic and technical cooperation. However, progress on these efforts has somewhat slowed, due to APEC’s culture of making all decisions by consensus. While some decisions are unanimous, they are not legally binding on the member governments.

Sub-Groups of APEC

APEC maintains a policy support unit to provide research and analysis to support the organization’s goals for the region, as well as special working groups to explore and promote various issues and components of economic development. These groups engage in multiple micro causes that aim to advance policy and awareness. Examples of these sub-groups include:

• Gender Issues: APEC sponsors a policy partnership on women and the economy to advance the economic integration of women. An estimated 600 million women are currently in the region’s labor force.
• Intellectual Property Rights: APEC’s Intellectual Property Rights Experts’ Group (IPEG) studies and exchanges information regarding the enforcement of intellectual property rights protections in the region. It promotes and facilitates cooperation to implement the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
• Emergency Preparedness: APEC’s Emergency Preparedness Working Group (EPWG) promotes business resilience, public-private partnerships, and information sharing among members to help build the region’s capacity to deal with emergencies and natural disasters. Economies along the geologically and climatologically active Pacific Rim are subject to events such as tsunamis, typhoons, earthquakes, and volcanic eruptions.

What Is an Anti-Dumping Duty?

An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.

In order to protect their respective economy, many countries impose duties on products they believe are being dumped in their national market because these products have the potential to undercut local businesses and the local economy.

Understanding Anti-Dumping Duties

In the U.S., the International Trade Commission (ITC)–an independent government agency–is tasked with imposing anti-dumping duties. Their actions are based on recommendations they receive from the U.S. Department of Commerce and investigations by the ITC and/or the Department of Commerce. 

In many cases, the duties imposed on these goods exceeds the value of the goods. Anti-dumping duties are typically levied when a foreign company is selling an item significantly below the price at which it is being produced.

While the intention of anti-dumping duties is to save domestic jobs, these tariffs can also lead to higher prices for domestic consumers. And, in the long-term, anti-dumping duties can reduce the international competition of domestic companies producing similar goods.

The World Trade Organization (WTO) is an international organization that deals with the rules of trade between nations. The WTO also operates a set of international trade rules, including the international regulation of anti-dumping measures. The WTO does not intervene in the activities of companies engaged in dumping. Instead, it focuses on how governments can—or cannot—react to the practice of dumping. In general, the WTO agreement permits governments to act against dumping “if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry.”

This intervention must be justified in order to uphold the WTO’s commitment to free-market principles. Anti-dumping duties have the potential to distort the market. In a free market, governments cannot normally determine what constitutes a fair market price for any good or service.

Example of an Anti-Dumping Duty

In June 2015, American steel companies United States Steel Corp., Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp., and California Steel Industries, Inc. filed a complaint with the U.S. Department of Commerce and the ITC. Their complaint alleged that several countries, including China, were dumping steel into the U.S. market and keeping prices unfairly low.

After conducting a review, one year later the U.S. announced that it would be imposing a total of 522% combined anti-dumping and countervailing import duties on certain steel imported from China. In 2018, China filed a complaint with the WTO challenging the tariffs imposed by the Trump administration. Since then, the Trump administration has continued to use the WTO to challenge what it claims are unfair trading practices by the Chinese government and other trading partners.

What Is the Aroon Oscillator?

The Aroon Oscillator is a trend-following indicator that uses aspects of the Aroon Indicator (Aroon Up and Aroon Down) to gauge the strength of a current trend and the likelihood that it will continue.

Understanding the Aroon Oscillator

Aroon oscillator readings above zero indicate that an uptrend is present, while readings below zero indicate that a downtrend is present. Traders watch for zero line crossovers to signal potential trend changes. They also watch for big moves, above 50 or below -50 to signal strong price moves.

The Aroon Oscillator was developed by Tushar Chande in 1995 as part of the Aroon Indicator system. Chande’s intention for the system was to highlight short-term trend changes. The name Aroon is derived from the Sanskrit language and roughly translates to “dawn’s early light.”

The Aroon Indicator system includes Aroon Up, Aroon Down, and Aroon Oscillator. The Aroon Up and Aroon Down lines must be calculated first before drawing the Aroon Oscillator. This indicator typically uses a timeframe of 25 periods, however, the timeframe is subjective. Using more periods garners fewer waves and a smoother-looking indicator. Using fewer periods generates more waves and a quicker turnaround in the indicator. The oscillator moves between -100 and 100. A high oscillator value is an indication of an uptrend while a low oscillator value is an indication of a downtrend.

Aroon Up and Aroon Down move between zero and 100. On a scale of zero to 100, the higher the indicator’s value, the stronger the trend. For example, a price reaching new highs one day ago would have an Aroon Up value of 96 ((25-1)/25)x100). Similarly, a price reaching new lows one day ago would have an Aroon Down value of 96 ((25-1)x100).

The highs and lows used in the Aroon Up and Aroon Down calculations help to create an inverse relationship between the two indicators. When the Aroon Up value increases, the Aroon Down value will typically see a decrease and vice versa.

When Aroon Up remains high from consecutive new highs, the oscillator value will be high, following the uptrend. When a security’s price is on a downtrend with many new lows, the Aroon Down value will be higher resulting in a lower oscillator value.

The Aroon Oscillator line can be included with or without the Aroon Up and Aroon Down when viewing a chart. Significant changes in the direction of the Aroon Oscillator can help to identify a new trend.

Aroon Oscillator Formula and Calculation

The formula for the Aroon oscillator is:

$\begin{aligned} &\text{Aroon Oscillator}=\text{Aroon Up}-\text{Aroon Down}\\ &\text{Aroon Up}=100*\frac{\left(25 – \text{Periods Since 25-Period High}\right)}{25}\\ &\text{Aroon Down}=100*\frac{\left(25 – \text{Periods Since 25-Period Low}\right)}{25}\\ \end{aligned}$​Aroon Oscillator=Aroon Up−Aroon DownAroon Up=100∗25(25−Periods Since 25-Period High)​Aroon Down=100∗25(25−Periods Since 25-Period Low)​​

To calculate the Aroon oscillator:

1. Calculate Aroon Up by finding how many periods it has been since the last 25-period high. Subtract this from 25, then divide the result by 25. Multiply by 100.
2. Calculate Aroon Down by finding how many periods it has been since the last 25-period low. Subtract this from 25, then divide the result by 25. Multiply by 100.
3. Subtract Aroon Down from Aroon Up to get the Aroon Oscillator value.
4. Repeat the steps as each time period ends.

Aroon oscillator differs from the rate of change (ROC) indicator in that the former is tracking whether a 25-period high or low occurred more recently while the latter tracks the momentum by looking at highs and lows and how far the current price has moved relative to a price in the past.

Aroon Oscillator Trade Signals

The Aroon Oscillator can generate trade signals or provide insight into the current trend direction of an asset.

When the oscillator moves above the zero line, the Aroon Up is crossing above the Aroon Down and the price has made a high more recently than a low, a sign that an uptrend is beginning.

When the oscillator moves below zero, the Aroon Down is crossing below the Aroon Up. A low occurred more recently than a high, which could signal that a downtrend is starting.

Limitations of Using the Aroon Oscillator

The Aroon Oscillator keeps a trader in a trade when a long-term trend develops. During an uptrend, for example, the price tends to keep achieving new highs which keep the oscillator above zero.

During choppy market conditions, the indicator will provide poor trade signals, as the price and the oscillator whipsaw back and forth.

The indicator may provide trade signals too late to be useful. The price may have already run a significant course before a trade signal develops. The price may be due for a retracement when the trade signal is appearing.

The number of periods is also arbitrary and there is no validity that a more recent high or low within the last 25-periods will guarantee a new and sustained uptrend or downtrend.

The indicator is best used in conjunction with price action analysis fundamentals of long-term trading, and other technical indicators.

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