2.1 The European Experience
The European Union is an important model for regional integration. From its modest beginnings as the European Coal and Steel Community in 1951, it has evolved to become the European Union of today, achieving economic and monetary union across the greater part of the continent. This has been an immensely complicated political process.
The politics of the European union can be divided into three major impulses. First was Germany’s search for respectability in the aftermath of World War II, which was made possible by its full participation in a wider, democratic and cooperative European project. Subsequently with German re-unification after 1989, fears of German domination could also be muted through continued participation in the EU. Second, for Germany’s smaller neighbours, and in particular France, the EU was a means of containing the threat of German hegemony. (The EU and Germany is a case of ‘contained hegemony.’) Lastly, as the EU has expanded and deepened, and its member states have achieved a degree of prosperity undreamed of, more and more smaller European countries have sought to join, in order to gain better access to markets, and access to the EU’s social and agricultural funds. This may be called ‘economic bandwagoning’.The European Union has never had an effective defence or foreign policy, although there are moves to establish these. Its success in the early decades was due in part to the military umbrella provided by the U.S.-dominated NATO. The collective fear of the Soviet Union helped drive the western European countries together.
The EU is a unique case of ‘north-north’ integration of developed capitalist economies. It is hard to draw wider lessons from this experience for ‘north-south’ or ‘south-south’ integration. However, the political institutions engaged in the EU process, including the Commission, Council of Ministers and Parliament, are worthy of study. For example, the functions of the integrative political institutions can be identified as providing (a) strategic direction, (b) coordination of tactical processes, that is organizing specific steps, and (c) a forum for the continuous negotiation of the first two. A high level of institutional capacity and investment of human resources in research, negotiation and monitoring has been important to the success of the EU.
2.2 The American Experience
A second important experience of regional economic integration is NAFTA. At first sight this appears to be a more purely economic pact, with much lighter political baggage. The threat of inter-state conflict in the region has been much less, for example. However, closer analysis shows that political motivations were the key.
Economic integration in the Americas is marked by the undisputed hegemony of the United States. The domestic politics of U.S. have been central to the development of economic integration in the Americas. There are several main themes. One is keeping isolationism at bay domestically (an important agenda for the U.S. major companies). The second is a response to regional problems such as the illegal drugs trade, migration etc. Thirdly it is a way of utilising regional economic integration (NAFTA and Pan-American integration) as a means of responding to the perceived economic threat of ‘Fortress Europe’ and Japan’s supposedly impenetrable domestic market. For the U.S., therefore, regionalization is a step towards globalization.
However, the question remains whether the U.S. is truly committed to accepting multilateral constraints on its economic policies, or whether U.S. regional hegemony may in fact allow the country to dictate the terms of economic integration throughout the hemisphere.
Among the U.S.’s neighbours, we can see a changing pattern of attempts to accommodate living alongside the world’s economic super-power. The cases of Canada, Mexico, Central and Southern American countries are all somewhat different depending on their internal politics. However, we can see a general pattern of response with three main stages. At first, there were attempts to diversify relationships and build national economies, to counter-balance U.S. power. This was followed in the 1980s, when the non-socialist countries in South America aligned themselves with the U.S. chiefly for political reasons, against the fear of leftist insurrections. The current situation is economic bandwagoning with Washington: joining the emergent hemispheric free trade area in the hope of benefiting from access to the U.S. market. All hope that this will be institutionalized bandwagoning, and fear that the integration will be at the whim of U.S. interests.
Central America, the Caribbean and the southern cone countries have also attempted their subregional organizations and pacts. These have had modest success, always overshadowed by the economic hegemony of the U.S. However, intra-regional trade in Latin America has grown under the umbrella of subregional integration arrangements, notably MERCOSUR.
2.3 The Asia-Pacific Experience
A third case of regional economic integration is the East Asia and Pacific countries, including ASEAN and APEC. This has elements in common with each of the above cases. It is akin to the European experience, in that the impulse towards integration was provided by capitalist countries threatened by Communism, under a U.S. military umbrella. However, from this point on, East Asian experience is sharply divergent, in two major respects:
Politically, the integration has not marked by institutional simplicity and a continuing respect for national sovereignty and non-interference in the internal affairs of member states.
Economically, it has been ‘open integration’, powered by multi-national companies seeking global markets.
The East Asian case is the clearest example of a general pattern for regional integration: it spreads out from a more developed core that plays a hegemonic political and economic role. This has been called the ‘flying geese’ theory of economic development. In this case the ‘lead goose’ is Japan, at the cutting edge of technological development. As it develops, the less advanced sectors are passed to the following geese (countries such as Thailand and Malaysia), where labour costs are lower, which in turn pass on their less developed sectors to the geese following them (e.g. Indonesia).
2.4 Regionalization and Globalization
In theory, globalization makes regionalization redundant. The two should be opposed: regionalization is founded on the preferential treatment of a number of countries, not equal openness for all. But in practice the two are largely complementary. The WTO does not prohibit any regional or subregional arrangements. (Wisely, because these trading blocs are a reality.) Provided that the overall trend is towards the lowering of tariff barriers and restrictions on investment, the WTO is less concerned by the preferential treatment of some countries. However, if regional blocs either maintain tariff walls at existing levels or even increase them, then regionalisation is incompatible with the development of global markets.
The relationship between globalization and regionalization depends upon the nature of the economies in question and the political choices made by the dominant power in the region concerned. In Europe, regionalization has been driven in part by an impulse to protect European countries’ economic and social systems from the pressures of globalization. The American and East Asian experience, which are both ‘north-south’, represent two different means of promoting globalization through regionalization. ‘South-south’ integration will be successful if it is part of a process of adapting to a wider regionalisation or globalization.
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