GO131:
International Relations
Professor Walter Hatch
Colby 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)
1985
European
Union
353
North
America
143
East
Asia
49
1990
828
226
137
1996
1249
437
390
Growth in RTAs
(average number of notifications to GATT/WTO per year)
25
20
15
10
5
0
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 integration
Realists: 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 Community
Treaty of Rome (1957) to create a customs
union (the EEC)
Single European Act (1986) to create a
common market
Treaty 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 policy
Labor standards
Regional policy
Structural 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 Area
1992: 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 investment
National 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 regionalism
but 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
Economic Disparity in Asia (2005)
5
4.5
4
GDP (trillion $)
3.5
3
2.5
China
2
1.5
1
Indonesia
0.5
0
Japan
South
Korea
Thailand
HK
Singapore
Malaysia
Vietnam
Philippines
Burma
Brunei
Laos
Cambodia
Other Explanations
US bilateralism
Asian nationalism
Security externalities
Illiberal states
Cultural diversity
No need