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Regionalism and the European Union

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This is an excerpt from Understanding Global Politics by Kevin Bloor. You can download the book free of charge from E-International Relations.

This final chapter examines the magnitude of regionalism as a force within global politics. This chapter seeks to analyse the causes of regionalism, evaluate its relationship with globalisation and outline the development of regional organisations. A primary focus will centre on the European Union (EU), an organisation which continues to provide something of a blueprint for deeper integration. The chapter also considers the significance of the EU as an actor on the global stage, before concluding with the manner and extent to which regionalism attempts to resolve issues such as the avoidance of conflict.


Different Modes of Regionalism: Economic, Political and Security

Regionalism can be defined in the context of international relations as the expression of a shared identity and purpose. It is combined with the creation and implementation of institutions that manifest regional identity and shape activity within that particular region. There are a wide number of regional organisations to consider with varying levels of integration. For instance, the depth of integration within the Arab League or the Association of Southeast Asian Nations (ASEAN) is considerably weaker than the EU.

It should be recognised that regionalism is the process through which larger geographical or even continental areas emerge as political organisations through integrated international institutions. This may provide a forum for cooperation between various states. The formation of regional blocs has often been driven by the growing impact of economic globalisation. As borders have become more porous, states have sought to co-operate more closely in order to deal with the consequences of interdependence. However, it could also be argued that regional free trade agreements function contrarily, against the process of globalisation.

The driving forces behind regionalism can derive from economic, security and/or political grounds. The European Economic Community (EEC), the forebearer to the EU, is a clear example of economic regionalism. The whole justification for the EEC was to enhance economic growth and development within the European continent. The economic success of the organisation in its early years managed to attract countries around it who soon sought membership. For instance, the United Kingdom was drawn towards the European project partly due to the relative economic success of the EEC.

The creation of the European Union in 1993 was emblematic of regionalism. As a result of the Maastricht Treaty, the EU adopted three separate pillars. These pillars consisted of the European Communities, the Common Foreign and Security Policy (CFSP) and cooperation in the field of Justice and Home Affairs. This was later abandoned when the Treaty of Lisbon came into force in 2009, and the EU obtained a legal personality. By contrast, NATO is an organisation based entirely upon security concerns. The principal justification for NATO is contained within Article Five of the North Atlantic Treaty, in which an attack on one is interpreted as an attack upon all, ensuring collective security. The European Union has also sought to develop its security dimension via a joint foreign and security policy. The emphasis is upon soft power, such as developmental cooperation, humanitarian aid and the EU’s diplomatic presence.

Allied to the three-dimensional character of regionalism is the distinction between old regionalism and new regionalism. Old regionalism is rooted in the experience of interwar nationalism, and as such held a tendency towards protectionism in the economic realm. The formation of the EEC is a clear illustration of the former. Contrastingly, ‘new regionalism’ entails a more spontaneous process that emerges from within the region itself. In doing so, the process of regionalism adopts towards the dynamics of the region in question. Inevitably, some regions are more conducive towards regional integration than others. The extent to which a particular region accommodates regionalism will also differ considerably over time. For instance, the process of European integration developed from economic to political regionalism. New regionalism is a more complex process that may take place simultaneously at a variety of levels.

The Relationship Between Regionalism and Globalisation

Regionalism is consistent with globalisation in three ways. First and foremost, regional economic blocs have formed due to the adverse impact of globalisation on national sovereignty. States have therefore been more inclined to work closely with other states in the same region, as borders have become porous as a result of normative adaptation within the wider discourse of international politics. This has been striking economically, due to financial markets and multinational corporations (MNCs) having such an impact upon the character of national sovereignty. It is worth noting that even the wealthiest and most powerful economies have been affected by the seemingly unstoppable trend towards globalisation. Membership of a regional bloc does provide at least some level of political influence for the member state in question.

A second reason for the formation of regional economic blocs is that they enable nation-states to resist pressure from external global competition. A regional bloc acting as a customs union can therefore act as a fortress against the pressures from the wider global economy. Perhaps the clearest illustration of this argument is the European Union (EU). The organisation has often been accused of creating trade barriers against states outside of the organisation. This argument is particularly salient towards many of the poorest economies within the Global South. Similarly, the EU can adopt a negotiating position that enables members to resist the competitive forces unleashed by globalisation. For example, the EU can adopt a common position in a trade agreement with China or the United States. It is more likely that a nation-state will have their voice heard as a part of one of the largest single markets in the world than if they were outside of such an organisation. In this manner, the power such a unit may hold will be greater than the sum of its parts, retroactively adding to the perceived power of its member-states.

Thirdly, member states rationalise that the path towards prosperity is by gaining greater access to regional markets. In an increasingly globalised economy, membership of a regional bloc firmly committed towards free trade is a positive. Membership of a free trade area provides access to a larger market. In doing so, it facilitates economies of scale for firms within the regional bloc. Furthermore, regional trade agreements enable the free flow of capital and labour. It is perhaps worth noting that the number of regional trade agreements has risen from just 50 in 1990 to well over 300 today (Fernandes et al.. 2021).

From the opposing angle, the relationship between regionalism and globalisation can be considered a contradictory one. Carving up the global economy on the basis of regional integration is clearly at odds with the actual meaning of globalisation. The rapid growth in the scope and scale of regional agreements is inconsistent with the creation of a truly global economy. Regionalism could therefore be described as the very opposite of the supposed global interconnectedness of states and non-state actors, centring focus on the regional as opposed to the global.

In order to substantiate this argument, the creation of regional organisations generates intra-regional trade rather than globalised trade. The existence of free trade areas, customs unions and common markets on a regional basis fosters trade amongst its members rather than with non-members. Regional integration also enables those organisations to place restrictions on those states outside of the organisation.

In economic parlance, regional integration fosters both trade creation and trade diversion. The motivation behind regional trade agreements is to enable increasingly free trade amongst the member states. However, it also leads towards trade diversion. This can present a major issue if protectionist measures are imposed against non-members. The practice of trade diversion contradicts the aims of the World Trade Organisation and the broader Washington Consensus. It is therefore inconsistent with the process of globalisation as it is usually grasped.

Whilst the terms are often presented on a binary basis, it is certainly plausible to claim that regionalism is intrinsically linked to globalisation. If globalisation is widely thought to be the mutual dependence of states, regionalism can be said to enable such dependence. This is a more nuanced understanding of international relations and one that arguably offers an increasingly convincing explanation of the actual reality of global politics.

The Prospects for Political Regionalism and Regional Governance

The prospects for political regionalism and regional governance are driven by a combination of internal and external factors. The former relates to those factors that characterise the region itself. External factors, however, relate to events that originate from outside of the region (such as the 2007–08 Global Financial Crisis). The internal forces that shape regional governance may be far greater in one area of the world than another. For instance, the devastation caused by the Second World War undoubtedly provided the impetus behind early moves towards European integration. In addition, the impact of external forces may be significantly greater in one area of the world compared to others.

In order to identify the prospects for regional governance and political regionalism, it is perhaps necessary to consider the issue on a region-by- region basis. In doing so, it is possible to highlight the prospects for political integration and governance. Within the European Union, the prospects for deeper integration appear to be negligible. Due to a combination of forces both inside and outside of their immediate control, the European Union failed to implement an effective convergence criterion. The European Union has also been affected by the decision of the United Kingdom to leave the organisation in 2016. Given the depth of Eurosceptic feeling within many countries, the prospect of deepening regional governance seems limited.

Unlike the European Union, integration within East Asia has been primarily of an economic character. The impetus behind recent political integration was provided by the dramatic impact of the financial crisis during the late 1990s. The financial contagion that swept throughout such relatively open economies required a co-ordinated response from the member states affected. The crisis exposed the dramatic nature of globalisation and the need for some level of political integration to mitigate the overall impact. This led to the Chiang Mai Initiative (CMI). The CMI began as a series of bilateral swap arrangements after the ASEAN plus Three (China, Japan and South Korea) held a meeting of the Asian Development Bank. This provided an Asian solution to the crisis, rather than the region becoming reliant upon the IMF. Having said this, progress towards regional governance remains slow, due to a lack of institutional integration.

In South America, regional governance has been limited by a number of familiar issues. These include the absence of economic convergence, a shift in the balance of global economic power and of course state sovereignty. The present situation consists of incremental attempts towards political regionalism in order to bolster democracy and regional security. The main impetus in recent times has centred upon liberalisation of trade. There are a number of complementary organisations within the region ranging from the Andean Community of Nations to the Southern Common Market – Mercado Común del Sur (MERCOSUR). The region also has a parliament acting as a consultative assembly similar to the early format adopted by the European Parliament. There are also plans to establish the institution as the legislative branch of the Community of Latin American and Caribbean States (CELAC). Created in 2010, the organisation reflects a decade-long push for deeper integration. In addition, the Pacific Alliance was created in 2012 amongst countries that border the Pacific Ocean. The aim of the Alliance is to establish the four freedoms in a manner comparable to European integration.

The path adopted by the European Union has also provided a blueprint for the African Union. The organisation has embedded several of the political elements of integration adopted within Europe. There are also signs that economic integration within the region is gathering pace. Although such institutions have not yet been established, there are moves to establish a single currency. This will entail the creation of a central bank based in Nigeria and a monetary fund within Cameroon. There are also plans to adopt an investment bank in Libya. In contrast, integration within North America seems unlikely due to the indifferent approach adopted by Washington. The United States is such a powerful country that integration with their neighbours does not offer anything like the same benefits as integration does for weaker states.

The Impact of Regionalism on State Sovereignty

The process of regionalism is widely viewed as having a negative impact upon state sovereignty. As states cede their authority towards regional organisations, they lose most of their ability to shape their own destiny. This was brought home in stark manner during the UK Brexit referendum, when a majority of the British public voted to leave the European Union. However, the picture is more nuanced than it might first appear.

There has long been a debate over the impact of regionalism on state sovereignty. There are those who claim that regionalism undermines the sovereignty of the state. This is based upon a zero-sum view of sovereignty. As a member of a regional bloc, decisions reached upon the basis of unanimity must be implemented by all the signatory states. This may be supported via the existence of supranational institutions. For instance, the African Union (AU) has recently strengthened its capacity to impose sanctions against member states who fail to meet their financial obligations. The Court of Justice of the European Union is another common illustration of this argument.

From the opposing angle, it could be convincingly argued that states merely pool (or share) sovereignty within any given regional organisation. In doing so, they are better able to shape their own destiny. They are also free to leave at any time. Crucially, this means that the sovereignty of the state has not been compromised. The salience of this argument is supported further by the broader process of globalisation. Issues within international relations tend to be of a cross-border nature (e.g. protection of the environment). Inevitably, this provides a persuasive reason for states to join regional blocs.

In recent years, it should be noted that certain countries have been able to reassert their sovereignty. Despite the combined forces of regional integration and globalisation, predictions about the demise of the nation-state and its associated sovereignty are overstated. Under the Trump administration, a number of decisions were consistent with isolationism. For instance, in 2017, the newly elected President decided to take the US out of the Trans-Pacific Partnership (TPP). The United Kingdom has also decided to counter the trend towards regional integration by leaving the European Union. Conversely, it must be recognised that these decisions have not slowed down the process of regional integration and globalisation. For instance, it is notable that when the United States withdrew from the TPP, in 2017, the remaining countries simply negotiated a new trade arrangement that incorporated most of the provisions from the former agreement. Equally, the European Union has continued with the process of deeper integration despite a major power leaving the organisation.

The Development of Regional Organisations (Excluding the EU)

The North American Free Trade Association (NAFTA)

The North American Free Trade Association is a trilateral trading bloc that consists of the United States, Canada and Mexico. NAFTA aims to reduce or eliminate barriers in the field of trade and investment between those three economies. One of the largest trading blocs in the world, the agreement came into effect during the mid-1990s.

In terms of its positives, the agreement ensures a more open trading system that represents just under 30% of the world’s Gross Domestic Product (GDP). Free trade has also contributed to a series of knock-on effects, such as lower transaction costs and a more efficient allocation of resources consistent with market forces. However, the impact has been controversial in terms of employment and the environment. In the US, NAFTA has been depicted as a source of job losses and lower wages. This criticism has been echoed by figures from both sides of the political spectrum. During the US electoral campaign in 2016, both Democrats (such as Bernie Sanders) and Republicans (such as Donald Trump) voiced anxieties felt within the ‘Rust Belt’ over the loss of jobs to lower-cost producers in Mexico. Trump, whilst president-elect, even referred to the agreement ‘the single worst trade deal ever approved in the US.’

During initial negotiations over the trade agreement, there was significant vocal opposition within the US over the potential impact on American employment. Supporters however claimed the economic benefits of the agreement would be significant. Revealingly, a recent........

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