Regional Economic Integration

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Regional Economic Integration

• Agreements between countries in a geographic region aim to reduce or eliminate trade barriers and coordinate economic policies.
• Integrations vary in form, each representing a different level of economic cooperation and integration.

Free Trade Area (FTA)

• Member countries remove tariffs and trade barriers among themselves while maintaining independent trade policies with non-members.
• No tariffs or quotas apply to goods traded within the area.
• Each country sets its own external tariffs for non-members.
• Examples are North American Free Trade Agreement (NAFTA), now replaced by USMCA, and European Free Trade Association (EFTA).

Customs Union

• Free trade area with a common external tariff (CET) on imports from non-member countries.
• No internal trade barriers exist between member countries.
• The same tariffs and trade policies are applied toward non-members.
• Eliminates the need for rules of origin checks between members.
• Examples are European Union Customs Union and Mercosur (Southern Common Market).

Common Market

• Customs union that allows the free movement of factors of production such as labor, capital, services, and people.
• No barriers to the movement of goods, services, capital, or labor.
• Harmonized product standards and laws.
• The European Single Market is an example.

Economic Union

• Common market with coordinated economic and fiscal policies, often including a common currency.
• Has a unified monetary policy, coordinated tax and spending policies, and possibly a common currency.
• The Eurozone and the European Union (to a large extent) are examples.

Political Union

• Deeper integration where member countries share not just economic policies but also political institutions.
• Features centralized government institutions and unified foreign, defense, and domestic policies.
• The United States is considered a full political union.
• The EU has some elements of a political union, but member states retain sovereignty in many areas.

European Union (EU) - Introduction

• Political and economic union comprising 27 member states primarily located in Europe.
• Established after World War II to promote economic cooperation and prevent conflict.

European Union (EU) - Founding Treaties

• Traces its origins to the European Coal and Steel Community (ECSC) and the European Economic Community (EEC).
• ECSC and EEC were established by the Treaty of Paris in 1951 and the Treaty of Rome in 1957, respectively.
• These treaties laid the groundwork for the integration of European economies and institutions.

European Union (EU) - Institutions

• European Commission is responsible for proposing legislation, implementing decisions, and upholding EU treaties.
• European Parliament is directly elected by EU citizens and shares legislative power with the Council of the European Union.
• Council of the European Union represents the governments of member states and adopts legislation and develops foreign and security policy.
• European Council comprises the heads of state/government of EU member states, provides strategic guidance, and sets the EU's political agenda.
• Court of Justice of the European Union ensures the interpretation and application of EU law.

European Commission - Function and Responsibilities

• Acts as the executive body of the EU.
• Has the sole authority to propose new EU laws
• Oversees the application and enforcement of EU laws and policies across member states.
• Prepares and implements the annual budget and supervises how EU funds are spent.
• Ensures that all member states and institutions comply with EU treaties and regulations.

European Commission - Composition and Headquarters

• Made up of 27 Commissioners (one from each member state).
• Includes the President of the Commission and High Representative for Foreign Affairs and Security Policy.
• Headquartered in Brussels, Belgium.

European Parliament - Function and Responsibilities

• Legislative arm representing the citizens of the EU.
• Shares legislative power with the Council of the EU, debating, amending, and voting on laws.
• Monitors the work of other EU institutions and can approve or reject the appointment of Commissioners.
• Shares authority with the Council of the EU to adopt the EU budget.

European Parliament - Composition and Headquarters

• Made up of Members of the European Parliament (MEPs) directly elected by EU citizens every 5 years.
• Sessions take place in Strasbourg (France).
• Committees and other work are conducted in Brussels.

Council of the European Union (Council of Ministers) - Function and Responsibilities

• Represents the individual governments of EU member states.
• Shares legislative power with the European Parliament, agreeing on most laws before enactment.
• Coordinates economic and social policy across the EU and develops the EU's foreign and defense policies.
• Authorizes the signing of agreements between the EU and non-EU countries or organizations.

Council of the European Union (Council of Ministers) - Composition and Presidency

• No fixed members; ministers from each country attend depending on the policy area (e.g., agriculture).
• Presidency rotates every six months among member states.

European Council - Function and Responsibilities

• Provides strategic leadership and sets the political direction of the EU.
• Determines the EU's overall strategy and priorities but does not pass laws.
• Addresses complex or sensitive issues that cannot be resolved at lower levels.
• Nominates candidates for top EU roles and the President of the European Commission.

European Council - Composition, Meetings, and President

• Includes the heads of state/government of the member states, the President of the European Council, and the President of the European Commission.
• Holds meetings at least four times a year (EU summits).
• President serves a 2.5-year term, renewable once, and chairs the meetings.

Court of Justice of the European Union (CJEU) - Function and Responsibilities

• Judicial authority of the EU, ensuring consistent interpretation and application of EU law.
• Ensures the law is interpreted and applied uniformly and settles disputes.
• Can annul EU legal acts if they violate treaties or fundamental rights.

Court of Justice of the European Union (CJEU) - Composition and Location

• Court of Justice deals with requests for preliminary rulings from national courts, actions for annulment, and appeals.
• General Court handles cases brought by individuals and companies directly, concerning competition law, trade, and agriculture.
• Located in Luxembourg.

EU Single Market

• The EU operates a single market, allowing free movement of goods, services, capital, and people.
• Aims to create a level playing field for businesses and consumers, enhancing competition and economic growth.

Eurozone

• Subset of EU member states (20 out of 27) that have adopted the euro currency.
• Governed by the European Central Bank, which sets monetary policy for the euro area.

Common Agricultural Policy (CAP)

• Goal: Ensure a stable food supply, support farmers, and promote sustainable agriculture.
• Key Features: Direct payments, rural development programs, and environmental sustainability requirements.
• Challenge: Balancing support for farmers with environmental concerns and fair distribution of subsidies.

Common Foreign and Security Policy (CFSP)

• Goal: Coordinate EU member states' foreign policy, promote peace, democracy, and international law.
• Key Features: Joint positions on global issues, sanctions, diplomatic measures, peacekeeping missions, and humanitarian operations.
• Decisions must be unanimous, which can limit effectiveness.

Common Commercial Policy

• Goal: Regulate trade relations between the EU and non-EU countries.
• Key Features: Negotiates trade agreements as a single entity and applies common tariffs and trade rules at external borders.
• The EU represents all member states at the World Trade Organization (WTO).

Common Security and Defence Policy (CSDP)

• Goal: Strengthen the EU's ability to act independently in defense and crisis management.
• Key Features: EU-led military and civilian missions and development of joint defense capabilities.
• Includes cooperation with NATO.

Common Transport Policy

• Goal: Create a unified, efficient, and sustainable transport network across Europe.
• Key Features: Development of the Trans-European Transport Network (TEN-T) and harmonized safety and technical standards.
• Includes environmental measures to reduce emissions.

Common Health Policy

• Goal: Protect public health and respond to cross-border health threats.
• Key Features: Coordination of pandemic response, promotion of health research and disease prevention, and supporting national health systems.

Environmental Policy

• Goal: Ensure sustainable development, protect natural resources, and fight climate change.
• Key Features: EU-wide regulations, the EU Green Deal, targets for carbon neutrality by 2050, and the Emissions Trading System (ETS).

Common Education and Cultural Policy

• Goal: Foster mobility, education quality, and cultural cooperation.
• Key Features: Erasmus+ program, support for language learning, and cultural preservation projects.

Common Asylum and Immigration Policy

• Goal: Create a fair and consistent system for managing migration and protecting refugees.
• Key Features: The Dublin Regulation, common standards for asylum procedures and refugee rights, and border security efforts.

Geopolitical Tensions and Security Challenges

• Russia-Ukraine War: EU response involves sanctions, aid, and debates over energy crises and defense spending.
• Defense and Security Autonomy: Increasing pressure on the EU to become less dependent on NATO and the US for defense.

Economic Disparities and Inflation Challenges

• North-South Divide: Wealthier northern countries have different economic priorities than southern nations.
• Inflation and Energy Crisis: Energy prices soared after the war in Ukraine, creating inflationary pressure.
• Public Debt and Austerity: High public debt limits some member states' ability to invest or respond to economic shocks.

Political Fragmentation and Populism

• Rise of Euroscepticism: Right-wing populist movements challenge EU integration.
• Rule of Law Issues: Clashes over judicial independence, media freedom, and democratic norms.
• Consensus-Based Decision Making: Slow and ineffective agreement on foreign policy or sanctions.

Migration and Asylum Policy Challenges

• Uneven Burden Sharing: Border countries bear the brunt of migration, while some resist taking in asylum seekers.
• Border Control vs. Human Rights: Balancing border security with humanitarian responsibilities is difficult.
• Integration Challenges: Social integration of migrants has triggered political backlash in some states.

Climate Change and Energy Transition

• Green Deal Implementation: Ambitious climate targets exist, but implementation is uneven.
• Energy Dependence: Cutting reliance on Russian gas requires rapid investment in renewables.
• Just Transition: Ensuring no region is left behind as industries adapt to green policies is a challenge.

Digital Transformation and Technological Sovereignty

• Digital Dependence: Heavy reliance on American and Chinese tech giants raises data privacy concerns.
• Innovation Gap: The EU lags behind the US and China in AI, quantum computing, and high-tech entrepreneurship.
• Digital Single Market: Harmonizing digital regulations remains incomplete.

Institutional Complexity and Democratic Deficit

• Complex Decision-Making: The EU's structure slows down decision-making.
• Democratic Deficit: Citizens feel distant from EU institutions.
• Low Voter Turnout: Elections to the European Parliament often have low turnout.

Enlargement and Integration

• Western Balkans and Ukraine: Enlargement concerns institutional overload, rule-of-law alignment, and economic disparities.
• Integration Challenges: Deepening integration is controversial and faces resistance.

History of EU - Post-WWII Origins

• The devastation of World War II led to seeking ways to prevent future conflicts and promote cooperation.
• European Coal and Steel Community (ECSC) was established in 1951 by six countries.

History of EU - Treaty of Rome and the EEC

• Treaty of Rome in 1957 established the European Economic Community (EEC) and the European Atomic Energy Community (EURATOM).
• EEC aimed to create a common market and promote free movement.

History of EU - Maastricht Treaty and EU Formation

• The Maastricht Treaty, signed in 1992, established the European Union (EU) as a political and economic union.
• Included the creation of the European Central Bank (ECB) and the introduction of the euro currency.

History of EU - Treaty of Lisbon and Institutional Reform

• The Treaty of Lisbon, signed in 2007, aimed to streamline EU institutions and enhance decision-making.
• Improved the EU's ability to address global challenges.

History of EU - Economic Challenges and Eurozone Crisis

• The EU faced significant economic challenges following the global financial crisis of 2008.
• Several eurozone countries experienced sovereign debt crises and austerity measures.

History of EU - Brexit and Challenges of Integration

• In 2016, the United Kingdom voted to leave the EU, leading to Brexit.
• The EU continues to grapple with challenges including migration and geopolitical pressures.

History of EU - COVID-19 Pandemic and Recovery Efforts

• The COVID-19 pandemic posed unprecedented challenges.
• The EU launched initiatives such as the Next Generation EU recovery fund.

###USMCA (NAFTA) - Background and Objectives

• The USMCA replaced NAFTA with key aims to eliminate trade/investment barriers between the United States, Canada, and Mexico.
• Proposed in 1987, negotiations began in 1991.

USMCA (NAFTA) - Implementation and Impact

• Signed December 17, 1992, and implemented January 1, 1994.
• Reduced tariffs significantly and established investment/intellectual property provisions.
• Increased economic integration but varied effects on jobs, wages, and industries.

USMCA (NAFTA) - Positive Impacts

• Increased trade and economic growth benefited export-oriented industries.
• Consumers saw lower prices for imported goods and more affordable American-made products.
• Investment and Job Creation: Spurred investment flows and job growth in export-oriented industries.
• Efficiency and Innovation: Increased competition spurred innovation and efficiency to become more competitive.

USMCA (NAFTA) - Negative Impacts

• Job Losses: US manufacturing experienced job losses due to relocation.
• Unequal Distribution of Gains: Economic benefits were not evenly distributed.
• Environmental Concerns: Trade increased pollution and resource depletion.
• Labor Issues: Lower wages and worker protections emerged in Mexico.
• Challenges for Farmers: Mexican farmers faced challenges competing with subsidized US crops.

USMCA (NAFTA) - Calls for Renegotiation

• Labor unions and political factions called for renegotiation.
• In 2016, President Trump's campaign platform focused on renegotiating to make the agreement more beneficial.

USMCA -Key Issues Requiring Reform

• Labor Standards, Rules of Origin, Dispute Settlement, Digital Trade, Environmental Standards, all required reform.

USMCA (NAFTA) - Focus Areas in USMCA Negotiations.

• included Labor Provisions: and addressed Enforcement mechanisms
• Also included the Revised Rules of Origin that tightened rules to ensure higher North American content.

USMCA (NAFTA) - Focus Areas in USMCA Negotiations..

• Also included Modernized Dispute Settlement process, and Digital Trade Chapter to address data flow and intellectual property.
• Included Environmental Commitments.

USMCA - Ratification and Implementation

• Leaders reached the agreement on September 30, 2018.
• The agreement was later signed on November 30, 2018, and ratified by all three countries.
• The USMCA came into effect on July 1, 2020, replacing NAFTA.

ASEAN - Overview :

• It promotes political / economic cooperation and regional stability among its member states.
• It was Established on August 8, 1967 with the The ASEAN Declaration, also known as the Bangkok Declaration

ASEAN - Members :

• 10 Southeast Asian countries including, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam,.

ASEAN - 2. Principles and Objectives:

• Includes respect for sovereignty, non-interference in members affairs and cooperations for benefit..
• Objectives include economic or social progress/ development, peace, stability, technological cooperation.

ASEAN - Community :

• ASEAN agreed to establish three pillars ASEAN: Political Security community, Economic community, and the Socio-Cultural society.
• To deepen integration between member states in a many areas.

ASEAN -Political Security Community (APSC):

• To strengthen Political and Security cooperation among member states to promote stability in the area.
• Some areas include conflict resolutions, and Maritime Security.

ASEAN - Economic Community (AEC):

• To create a trading zone within the ASEAN region.
• Reduce or eliminate Tariffs, harmonize investment laws and encourage cooperation in agriculture.

ASEAN - Socio-Cultural Community (ASCC):

• Aim is to promote development ,human rights protection within the ASEAN region.
• The focus areas : Education, Resource development, healthcare, environment, and gender equality.

ASEAN -External Relations and Success Indicators:

• There has been establishment of dialogue relationships various Nations.
• Also instrumental intra regional trade, eliminates tariffs, and trade volume.

ASEAN - Investment liberalization, Trade facilitation :

• Promotes free flow of investments throughout region.
• Implementation to simplify all procedural customs and improve regional infrastructure.

ASEAN Intra regional Trade Growth:

• Has grown significantly since AFTA's formation.

ASEAN Financial Integration and Regional Cooperation :

• Has initiatives to facilitate finance.
• Fosters collaboration in many fields to the benefit of each other.

ASEAN Challenges, and Non Tariff Barriers:

• These can be complex , and impede regulations, lack of infrastructure.
• Inequality in development between member states can be a hindrance.

SAARC -Overview/Origins /Establishment:

• SAARC promotes cooperation and development in South Asia amongst members.
• It was founded December 8, 1985 by heads of state from Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.

SAARC Mandate Objectives:

• To foster development and improve regional cooperation/ and growth.
• Improve relations and understanding between member states by cultural/diplomatic exchanges.

SAARC Structure:

• Operates various institutional mechanisms incl, summits, Ministerial council, Steering commitee, and Secretariat.

SAARC Key Functions and Activities:.

• Trade and economic cooperation via improvement of technology, economic integration, and trading in general.
• And improvement in transportation, communication, energy amongst member states.

SAARC Assistance.

• Promotes mutual cooperation in preparation for humanitarian crisis / disaster relief with a focus on helping rebuild the population after a crisis.

SAARC Limited Trade Growth:

• Intraregional trade share remains low.

SAARC -Reasons for limited Access:

• Includes tensions particularly between Indian and Pakistan, political instability due to trust deficit.
• Also limited focus on service trade and neglecting growth for IT service and tourism.

SAARC Road Ahead:

• Needs to improve relations, streamline processing, improved procedures reducing NTB's.
• Enhanced liberalization, encourage investment in Infrastructure particularly communication and transportation.

EU Feature Comparison

• Was created via Mastricht treaty.
• Has economic and political integration.

USMCA Feature Comparison:

• Trade and investment facilitation.

ASEAN feature comparison.

• Was formed in 1976.
• promotes growth through regional stability.

SAARC Feature Comparison:

• Focuses on regional Cooperation and development.

GATT Overview:

• Aims to promote international trade by eliminating trade barriers such as Tariffs, and quotas.
• It was negotiated during the United Nations Conference on Trade and Employment, UNCTAD.

GATT primary Objectives:

• Economic recovery, foster trade, prevent backsliding, and protect against protective trade policies.
• Countries agree to trading terms, protect domestic economies

GATT Principles:

• Agreements to reduce the number and quantity of Tariffs and other barriers.

GATT Rounds of Negotiations:.

• Geneva round in 1947 was the first round signing the GATT agreement.
• Uruguay round in 1986-1994 was the largest round which later created into the trade organization WTIO.

World Trade Organization (WTO) Functions:

• Facilitates trade and protects against issues between countries.
• Provides a dispute settling body, that overseas process and issues rulings for established procedure.

The World Trade Organization (WTO), key agreements:

• Addresses trade and agricultural products with reducing subsidies and improving market.
• Trade in intellectual property rights TRIPS, also General agreement of trade in services such as telecommunications.

WTO Objectives:

• to eliminate favorization between countries for business owners, while promoting non discriminating policies.
• enhance transparency while notifying the WTO of any changes.

Trade Related Aspects of Intellectual Property rights TRIPS objectives:

• Set minimum standards to protect countries and provide trade protection.
• Promote innovation, support and encourage economic development.

General Agreement on Trade in Services (GATS) Objectives:

• Liberalize trade with lower tariffs and barriers to trade in member countries.
• Set up rules that favor competition while being transparent in countries, and facilitating providers for trade,

Institutional Bodies of The WTO:

• The General Council: the head of decision makers for the WTO.
• The trade negotiating committee that facilitates negotiations among member countries.

Dispute settlement body DSB,.

• Is responsible for the dispute settlement and oversight.
• It provides forums for consulting mediation and adjudication.

Trade policy Review Board (TPRB):.

• Conducts meetings for regular dialogue with transparent dialogue and regular adherence.

WTO Secretariat

• Provides technical and administrations for the member countries.

The World Bank:

• The World bank comprises 180 to 200 countries.
• Provides loans and financial structure and stability to underdeveloped areas.

The World Bank. History

• Established in 1944 to provide Assistance to war torn areas after the aftermath of world war.
• Focused providing infrastructure to roads, bridges, power generators.

The World Bank - Structure:

• It consists of five institutions including the following :
• Reconstruction and Development to credit worthy low incoming countries for projects.

The World Bank Structure 2:-

-The,International Development Association for support in financial development in the poorest areas.

• The, international financial corporation projects.

The World Bank objectives:.

• To reduce poverty and aim toward sustainable economic development.
• Support policies that create opportunity, growth,, reduction, inequality within the countries

The World Bank Financial instruments:

• Provides financial assistance with different Instruments.
• Provides loans with market interest rates.

The World Bank Governance:-

• Has a set of goals for the the structure with a board, executives , and governance principles..
• Each country has assigned a number of the bodies.

-IMF Functions :

• Provides stability, monitor the global economy, with financial oversight.
• Helps provide Economic development with training and management.

IMF. Quotas and voting rights:.

• Is the financial contribution that each country makes to the IMF..
• Can increase and depend based on the size of the economy, or openness to trade.

IMF. Voting Rights:.

• Each member country is allocated number of votes based on the financial quota .
• The size or weight determines the quota given, and there is a limit for a voting threshold.

Special Drawing rights SDR.

• Is a type of reserve asset that is created by the by member countries to create a financial backup.
• to support the currencies and provide quick financial support or liquidity if needed to domestic financial institutions.

-Critique.

• Intervention and the effectiveness and sustainability can be a point of concern.
• Effectiveness of financial aid has been a topic to evaluate especially from countries with a lack of democracy.