Week 10 - Regionalism and New Regionalism (1).ppt

Today’s Lecture Regionalism Department of Government  Regionalism Regional trade agreements are the major exception to the World Trade Agreements requirement for non-discrimination Regional trade agreements have grown massively since 1995. Ravenhill (2017...

Today’s Lecture Regionalism Department of Government  Regionalism Regional trade agreements are the major exception to the World Trade Agreements requirement for non-discrimination Regional trade agreements have grown massively since 1995. Ravenhill (2017: 141) points out that 50% of world trade takes place within an RTA. Regionalism is the process of intergovernmental collaboration between two or more states The EU is the most successful example of regionalism in trade but there are many examples to be found: Andean Community of Nations, East African Cooperation and NAFTA Department of Government  Diversity of trade co-operation Regional interactions does not capture the diversity of activity. Trade agreements now take many forms: – Bilateral within region – Bilateral trans region (Korea-Chile) – Regional (EU) – Trans-regional (Trans-pacific trade partnership) – Inter-regional (EU-Mercosur) Department of Government  Political Motivations for Regionalism Improving inter state relations ASEAN, EU Enhance the security of a region (New Security Agenda) environmental damage, pollution, trafficing organized crime, international terrorism. Regionalism is a bargaining tool with MNCs and IOs. Regional trade agreements can be a mechanism for embedding reforms. Department of Government  Economic Motivations for Regionalism Regionalism protects sectors which cannot compete internationally It provides opportunities for deeper integration Regionalism may increase the opportunities for FDI and give access to larger “domestic” markets Department of Government  The Rush to Regionalism The first wave is associated with the creation of the EEC but also occurred among the decolonizing countries of Africa and in South America The main driving force was that local agreements could assist countries in industrializing together Many agreements failed over disputes about the benefits and costs associated with regional co- operation The next wave of regionalism did not take off until the 1990s Department of Government  The New Regionalism The end of the Cold War changed the environment for regionalism Many former Soviet States sought to enter agreements with the EU Similar circumstances emerged in Asia with China entering regional agreements with Japan and South Korea The growth in neo-liberalism encouraged governments to pursue market friendly policies Investors moved to countries with favourable business conditions Financial markets punished governments which did not embrace the prevailing orthodoxy Regionalism emerged as a first step taken by countries to signal their interest in integrating into the global economy Some governments saw regionalism as a mechanism for defending themselves against the problems of globalization while allowing them to dip into aspects which they wanted Stasis in the world trade talks meant that countries seeking trade deals realised that these were more likely to be achieved outside the WTO Department of Government  New Regional Agreements since 1995 Often involved agreements between developed and developing countries (NAFTA) Arose partly because progress on international agreements was very slow in the 1990s Contagion effects are also an explanation; regionalism in one part of the world leads to regionalism in other parts. New regionalism was also a possible counter balance to the dominance of Western European trading power since the later 1980s Department of Government  Regional Trade Agreements (Source: O’Brien and Williams, 2014) Developed Developed Developed Developing Developing Transition Total - - - - - – Developed Developing Transition Developing Transition Transition 1958-1964 2 0 0 1 0 0 3 1965-1969 0 0 0 0 1 0 1 1970-1974 5 1 0 2 0 0 8 1975-1979 0 3 0 1 0 0 4 1980-1984 2 1 0 2 0 0 5 1985-1989 1 1 0 2 0 0 4 1990-1994 3 3 4 5 1 5 21 1995-1999 3 7 0 4 2 16 32 2000-2002 0 11 4 8 2 5 30 2003-2005 2 9 0 4 2 16 33 Total 18 36 8 29 8 42 141 Department of Government http://rtais.wto.org/UI/publicPreDefRepByRT AType.aspx Link to: WTO List of Registered Agreements List of Early Announcements Agreements by Region and by Criteria Department of Government  US Regional Agreements Trans Pacific Partnership – US and 11 Pacific Rim States http://www.nytimes.com/2015/10/06/business/international/ the-trans-pacific-partnership-trade-deal-explained.html? smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=0 Trans Atlantic Trade Negotiations (TTIP) discussions all but collapsed during the Trump presidency and remain uncertain under a Biden presidency as the tectonic plates of globalisation shift. Some end 2020 speculation at https://www.irishtimes.com/business/economy/eu-proposes- once-in-a-generation-alliance-with-us-in-face-of-china- challenge-1.4423375 Department of Government New Regionalism Characteristics Agreements between countries North and South The rise of regional consciousness or regional identity One country could be a member of more than one regional agreement Cooperation took many forms Department of Government  Attitudes to Regional Agreements The US was not a supporter of regional agreements. It agreed to the EEC because it believed that it was achieving political goals of reconciliation Security concerns were given primacy over economic ones Its attitudes towards developing countries regional agreements was not as tolerant The slow progress at international level moved the attitude of the US and in 1982, it became a supporter of regional agreements Canada and the US signed a free trade agreement in 1988 In the 1990s, the US began to actively pursue regional agreements Trump suggested that he would repeal NAFTA during his first term, he hasn’t focused as much on this since his re-election but there are very serious qestions about the future direction of US trade policy Department of Government  New Regionalism and the WTO A number of difficulties arose from the growth in regional agreements. Some were not compatible with existing GATT agreements A European agreement on bananas was one of the test cases for integrating regional deals into the WTO framework (ACP countries were given preferential treatment- major case by Dole and Chiquita) The WTO concluded that the EU could not have preferential deals with some countries and as a result regional agreements which were compatible with WTO agreements began to be completed Department of Government  Regionalism and the WTO The position of regionalism relative to global free trade is now a source of major debate There are several argument on how regional deals might be used to advance World Trade talks Department of Government  Ravenhill: 2020 1. Global negotiations involving regional groupings reduce the number of actors involved 2. Reaching agreements on issues of deeper integration will be easier within regional groups. These agreements could then be models for global agreements 3. Regional agreements enhance the competitiveness of domestic sectors and could be a starting point for full global integration Department of Government  Ravenhill: 2020 4. Regional agreements improve the financial position of export oriented interests, providing them with a platform to lobby for more international liberalization 5. The agreements level the playing field by creating a domino effect in regionalism. Companies from some countries get preferential access to markets, their competitors lobby their governments to sign deals with the governments to allow them access also. Department of Government Difficulties with the Stepping Stone Arguments Regional groups often have difficulties agreeing their internal positions (EU) Having reached an internal deal, regional groups may have limited lever room. Few regional agreements have moved beyond the removal of tariff barriers Regional competition among companies is not the same as global competition Department of Government  Stumbling Block Arguments Regional agreements often allow big economies to dictate to smaller ones Developing countries direct their limited resources away from WTO talks to regional agreements Can lead to the spaghetti bowl effect (Bhagwati 1995) Department of Government  Assessing the Evidence The final conclusion of the Uruguay round of trade talks indicated that there was still impetus for a global trading regime However, the inability to conclude the Doha round raises doubts about the push for further trade liberalisation The global political balance also seems to be tipping away from further trade deals. Department of Government  Discussion Questions Discuss and explain the roles of production and trade in the international trade and production structure. Why is trade so controversial? Do you believe that regionalism promotes or acts against the process of globalization? Department of Government  Resources Ravenhill, J. (2020) Global Political Economy Dadush, U. (2015) The Truth About Trade https://www.foreignaffairs.com/articles/2015-11-18/truth-about-trade Beeson, M., Regionalism and globalization in East Asia : politics, security and economic development Keating, M., and Loughlin, J., (1997) The Limits of Regionalism Baldwin, R., et al (1999) Market Integration, Regionalism and the Global Economy Borzel, TA and Risse, T (2016) (eds) The Oxford Handbook of Comparative Regionalism. Fort, B., and Webber, D., (2006) Regional Integration in East Asia and Europe Department of Government http://www.wto.org/english/tratop_e/ region_e/region_e.htm Dadush, U. (2015) The Truth About Trade https://www.foreignaffairs.com/articles/2015- 11-18/truth-about-trade Department of Government