GO131: International Relations Professor Walter Hatch Colby College Regionalism

1. GO131: International Relations Professor Walter Hatch Colby College Regionalism

3. 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

4. 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

5. Which comes first?

6. Intra-Regional Exports(US$ billion)

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

8. Growth in RTAs

9. Why the new interest in regionalism? • Multilateral (WTO) negotiations slow • “Everyone else is doing it” • Competing blocs • demonstration effect

10. Hierarchy of RTAs • Free Trade Agreement • Customs Union • Common Market • Economic Union

11. A World of RTAs

12. 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

13. IRA Puzzle #2 • Why do RTAs differ so much from region to region? • Europe • North America • Asia

14. European Union

15. 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

16. A Highly Institutionalized EU • European Commission • European Parliament • Council of the EU • Court of Justice • Court of Auditors

17. 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)

18. 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)?

19. NAFTA

20. 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)

21. What NAFTA Did • Reduced tariffs over 10 years • Created rules for investment • National treatment • Intellectual property rights • Financial regulations • Established procedures for resolving disputes

22. What NAFTA Didn’t Do • No large bureaucracy • No economic union, common market or even customs union • No powerful court

23. Asia • High level of regionalization • Low level of regionalism • but rising steadily

24. APEC

25. 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

26. ASEAN

27. “The ASEAN Way” • Consensus decision-making • Policy of non-interference • Standing secretariat, but limited staff • Delayed timetable for AFTA

28. Building on ASEAN • East Asian Economic Group • Asean + 3 • China-ASEAN FTA • Japan-ASEAN EPA?

29. Explaining Asia

30. Other Explanations • US bilateralism • Asian nationalism • Security externalities • Illiberal states • Cultural diversity • No need