GO131:International Relations

Professor Walter HatchColby College

Regionalism

Defining Terms

Regionalization (an economic process)market integration associated with the cross-border flow of capital, labor, and technology within a specific area or region

Regionalism (a political process)cooperation among states to create institutions to help bring about or support economic integration in a region

What’s a Region?

An area encompassing three or more nations that have

Shared sense of political or cultural identity and/or

Potential for economic complementarity and/or interdependency

Which comes first?

Intra-Regional Exports(US$ billion)

European Union

North America

East Asia

1985

353 143 49

1990

828 226 137

1996

1249 437 390

Growth in RTAs(average number of notifications to GATT/WTO per year)

0

5

10

15

20

25

1948-94 1995-2000

Growth in RTAs

Why the new interest in regionalism?

Multilateral (WTO) negotiations slow

“Everyone else is doing it”Competing blocs

demonstration effect

Hierarchy of RTAs

Free Trade Agreement

Customs Union

Common Market

Economic Union

A World of RTAs

IR Puzzle #1

Why do states agree to “pool” sovereignty in the form of RTAs?

Liberals: integration begets further integrationRealists: powerful states (regional hegemon)Constructivists: regional identities

IRA Puzzle #2

Why do RTAs differ so much from region to region?

Europe

North America

Asia

European Union

History in Brief

Treaty of Paris (1951) to create a European Coal and Steel CommunityTreaty of Rome (1957) to create a customs union (the EEC)Single European Act (1986) to create a common marketTreaty of Maastricht (1992) to achieve monetary union

A Highly Institutionalized EU

European Commission

European Parliament

Council of the EU

Court of Justice

Court of Auditors

Free Markets or Social Welfare?

Common Agricultural Policy (CAP)Reduced tariffs on intra-regional trade

But spends about $63 billion a year to subsidize farmers

Social policyLabor standards

Regional policyStructural funds ($250 billion in 2006)

Cohesion fund ($23 billion)

EU Expansion

EU expanded from 15 to 25 (May 1, 2004)Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, and Slovenia

EU will expand again (2007)Bulgaria and Romania

And then again (with Turkey)?

NAFTA

NAFTA History in Brief

1989: US and Canada set up US-Canada Free Trade Area1992: Mexico agrees to join the two others to create NAFTA (beginning January 1st 1994) 1994: Negotiations begin on plan to expand NAFTA to create hemisphere-wide Free Trade Area of the Americas (FTAA)

What NAFTA Did

Reduced tariffs over 10 years

Created rules for investmentNational treatment

Intellectual property rights

Financial regulations

Established procedures for resolving disputes

What NAFTA Didn’t Do

No large bureaucracy

No economic union, common market or even customs union

No powerful court

Asia

High level of regionalization

Low level of regionalismbut rising steadily

APEC

APEC: Brief History

Created in 1989

Reinvigorated by Clinton in 1993

1994 “vision” (but no treaty) of free trade by 2010 and 2020

1997: failed EVSL of trade in forestry and fish products

ASEAN

“The ASEAN Way”

Consensus decision-making

Policy of non-interference

Standing secretariat, but limited staff

Delayed timetable for AFTA

Building on ASEAN

East Asian Economic Group

Asean + 3

China-ASEAN FTA

Japan-ASEAN EPA?

Explaining Asia

China

IndonesiaHK Singapore Vietnam Brunei Laos

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

GD

P (

trill

ion

$)

Japan SouthKorea

Thailand Malaysia Philippines Burma Cambodia

Economic Disparity in Asia (2005)

Other Explanations

US bilateralism

Asian nationalism

Security externalities

Illiberal states

Cultural diversity

No need