Regional Economic and Political Integration

1. Regional Economic andPolitical Integration Dana-Nicoleta Lascu Chapter 4

2. Chapter Objectives • Provide an overview of the determinants of regional economic and political integration • Examine the different levels of economic and political integration and identify, within each world region, economic and political agreements that have met with success • Examine the functions of the different policy and governance bodies of the European Union

3. Determinants of Economic and Political Integration • Shared culture • Shared history • Regional proximity • Similarity in level of economic development

4. Impediments to Economic and Political Integration • Differences in culture and history • Physical distance • Differences in level of economic development • Political considerations: • Concerns regarding loss of sovereignty • A history of conflict

5. Levels of Regional Economic and/or Political Integration and Examples of Integration Successes Political Union Monetary Union Common Market Free Trade Agreement General Bilateral/Multilateral Agreement

6. General Agreements: Bilateral and Multilateral Forums and Agreements • Bilateral Agreements • Limited to two countries • Multilateral Forums and Agreements • General agreements between multiple countries • Typically, they are industry specific • OPEC • NATO • Asia-Pacific Economic Cooperation • Commonwealth of Independent States

7. Free Trade Agreements: Europe • Countries reduce or eliminate trade barriers on all goods and services traded between them • European Free Trade Association • Member countries: Iceland, Liechtenstein, Norway, and Switzerland • Central European Free Trade Agreement (CEFTA) • Member countries: Hungary, the Czech Republic, Slovakia, and Poland. • The more developed countries of the former Soviet Bloc, adopting policies to facilitate adherence to the European Union

8. Free Trade Agreements: Asia • Countries reduce or eliminate trade barriers on all goods and services traded between them • Association of Southeast Asian Nations (ASEAN) • Most successful example of regional economic integration in Asia • Member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam

9. Free Trade Agreements: Americas • North American Free Trade Agreement (NAFTA) • Member countries: Unites States, Canada, and Mexico • Free Trade Area of the Americas (FTAA) • Member countries: the 34 democratic nations of North, Central, and South America • Ambitious plan to create a market of 800 million people and an annual production worth $11 trillion in the current decade

10. Free Trade Agreements: Africa • Southern African Development Community (SADC) • Free trade organization promoting economic cooperation among 14 of Africa’s more affluent countries: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Seychelles, the Republic of South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe • Arab Maghreb Union (AMU) • Member countries: Algeria, Libya, Mauritania, Morocco, and Tunisia • (inactive, but not defunct)

11. Customs Union • Trade association that eliminates or greatly reduces all trade restrictions for member countries and also adopts common external tariffs on products imported from outside the area • South African Customs Union

12. Common Market • Eliminate all tariff and non-tariff barriers to trade, adopt common external tariffs, and allow for free movement of capital and labor within the common market • European Union reached this stage before establishing a monetary and political union • Latin American Integration Association • Andean Common Market • Southern Cone Common Market (MERCOSUR) • Central American Common Market • Common Market for Eastern and Southern Africa

13. Monetary Union • Involves: • A common monetary policy • The creation of a unified central bank • The use of a single currency

14. Monetary Union, continued • European Monetary Union • Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain • European Central Bank • West African Economic and Monetary Union • Economic Community of West African States

15. Political Union • Common governing & legislative bodies, and enforcement powers • European Union • Member Countries: • Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom

16. Bodies of the European Union • European Council: • The highest policy-making body, it consists of heads of member-countries’ government • European Parliament • Consists of members elected by direct universal suffrage with representation allocated among member states based on their population • Debates the policies and legislation in the European Union • Council of Nations • Consists of representatives from parliaments of member countries and acts as constitutional council that has the power to overrule the Court of Justice.

17. Bodies of the European Union, continued • Council of Ministers • The decision-making body (legislature) of the European Union • Composed of one minister from each member country • Passes laws based on proposals of the EuropeanCommission • European Commission • The executive body of the European Union • Subordinated to the European Council • Consists of a president and commissioners who are in charge of initiating and supervising the execution of laws and policies • Answers to the European Parliament • Acts only on behalf of and in the interest of the European Union, and not that of individual member states

18. Bodies of the European Union, continued • European Central Bank • Enacts the monetary policy for the countries that are members of the European Monetary Union • Maintains price stability within the European Monetary Union • European Court of Justice • The European Union’s equivalent of the United States Supreme Court • The final court of appeals • Can overrule decisions of the national courts

19. Chapter Summary • Discussed determinants of regional economic and political integration • Examined levels of integration and the different agreements in each world region • Examined the functions of different policy and governance bodies of the European Union