The EU: A Model For Regionalism Around The World? Flashcards
arguments suggesting that the European Union has been a model for regionalism around the world
economically
security
fostering cooperation and peace
arguments suggesting that the European Union has NOT been a model for regionalism around the world
economically
politically
sovereignty
economically
ECONOMICALLY
Perhaps the most successful principle of the EU is its economic practices. By practising free trade amongst members, the EU reaps the benefits of comparative advantage. David Ricardo’s work mentions that trade is beneficial for all if it is free trade focusing on comparative advantage. The right-wing Adam Smith also notes how the cost of production falls due to specialisation enabled by free trade. This is effectively ensured by EU’s policy of freedom of movement of labour, capital, goods and services. This has indeed made trade easier in the region and boosted economic growth. Truly, the UK sees over 40% of its exports to the EU. Such a regional bloc also enjoys external benefits as the bloc is regarded as one market, allowing for better negotiating abilities when discussing trade agreements between other states, as shown by the average of 3%> tariffs between the US and the EU. This has acted as a model for other economic blocs to emerge, such as ASEAN and APEC.
NAFTA – a free trade agreement eliminating tariff and non-tariff barriers to trade and investment on goods and services, the main objective is to improve trade and prosperity for the three signatory states
One of the most distinct ways in which the EU has traditionally been a model for regionalism is in the economic sense. Proponents of the Functionalist theory of integration such as David Mitrany assert that “form follows function”, with the model of integration suggesting that economic trade blocs beget further regionalism. This was evidently the case for the EU, which began as a trade bloc in the form of the 1952 European Coal and Steel Community. This led to the integration of other energy sectors, leading to the European Atomic Energy Community, until the eventual creation of the European Community. Increasing economic interdepence leads to ideas such as standardisation of quality requirements for goods and produce to facilitate easier trade between states. This model of regionalism has evidently been increasingly emulated, as from 1990 to 1994 the GATT was informed of over 33 new regional trade agreements. One of the most distinctive emulations of the EU model came in 1994 with the West African Economic and Monetary Union, one of few regional currency unions globally (the CFA Franc, which is pegged to the Euro). This stems from economic integration meaning trade between constituent nations like Burkina Faso, Niger and Cote d’Ivoire is made easier by sharing a currency.
Euro and the Afro
Economically outward looking, seeking to trade with other states and organisations outside of its members – Another difference is that political regionalism is very much inward looking whereas economic regionalism is outward looking. This means that political regionalism tends to focus on its own members, while economic regionalism has far more of a global reach and works across the globe with numerous other states and organisations who aren’t members. For example, the EU trades across the world, with other states outside of its 28 members, and ASEAN has a trading relationship with Japan, who is not a member.
both Asean and the EU have concluded many free trade agreements or comprehensive economic partnership agreements with other countries. For example, the EU and Singapore have concluded a free trade agreement which is pending ratification. Asean has concluded such agreements with China, Japan, South Korea, India, Australia and New Zealand
both Asean and the EU hold regular political and economic dialogues with important external partners. The EU holds annual summits with, among others, the United States, China, Japan and Russia.
Asean has created three forums to engage its external partners, namely, the Asean Regional Forum, Asean Plus Three and the East Asia Summit. In addition, Asean holds bilateral dialogues with its 10 dialogue partners. Finally, Asean holds an annual summit with the US, China, India, Japan and South Korea.
economically
ECONOMICALLY
In the case of the EU, there is freedom of movement of goods, services, capital and labour. In the case of Asean, the movement of labour is not free. The Asean Charter obliges the member states only to facilitate the movement of business persons, professionals, talents and labour. This is a major difference between Asean and the EU.
The second difference is that the EU has a common currency called the euro. Only 19 of the EU’s 28 members are members of the euro zone.
Asean does not have a common currency and has no plans to have one.
Whether the economic practices are worth modelling is indeed worth disputing. This is especially because the EU promotes that members adopts its single currency- the Euro. Those in the Eurozone see common monetary policy made by the ECB. Though the lack of common fiscal policy led to the Eurozone crisis of 2009. Indeed, due to the common interest rate for loans, based on Germany’s economy, irresponsible economies such as Greece see the ability to borrow extraordinary amounts which they have no means of repaying. This is what led to Greece defaulting on its debt, but as the region is so financially interconnected, the calamity of Greece spread throughout Europe as banks all over Europe had to be bailed out. Realist would therefore condemn monetary unison as they would postulate that such crises are inevitable due to the selfish nature of states. This therefore makes the EU’s principle of economic regionalism unattractive to model.
However, argue there is a limited extent to which West African Monetary Union provides an exemplar of the EU as a model for regionalism, as it may instead serve as an instance of neo-colonialism. Instead of functionalist integration, regionalism may be being increasingly imposed and artificially encouraged by institutions like the EU even where it does not directly align with state interests. According to more Realist, intergovernmentalist understandings of regionalism, the EU no longer remains a model for most states as exemplary regionalism as it typically fails to align with their interests. For instance, in November 2015 ASEAN announced their “2025 blueprint” for the organisation. As one of the most successful and distinctive regional organisations outside of Europe, it is notable that even this plan failed to include desires for a monetary union. Economic regionalism for this organisation and many like it is thus limited to its “closed” sense; the creation of import substitution and preferential tariffs within the region to prevent outside competition. This does not in itself encourage further economic integration and the increasing competency (powers) of individual institutions as per the European model without the influence of alternative, external factors. These may be exogenous such as the US’s instrumental role in the formation of the EU and the EU’s role in forming regional organisations elsewhere globally, or they may come in the form of desires for security or political collective security.
This may link to what may be deemed the “non-replicability” of the European model of economic regionalism, as well as its failures. The Eurozone crisis was in part caused by the problems of having distinctly economically and culturally different countries within the same monetary union. This led to the problem of Greece, with its low tax collection rate and high public spending, negatively impacting the value of the Euro as it consistently borrowed to fund its expenditure, as opposed to economies like Germany which operate under completely different philosophies. Europe contrasts most regions globally in being relatively homogenous in terms of the general nature of its economies, values, demographic makeup and culture. The economic diversity of South America, for instance, means that Brazil is by far the pre-eminent state in MERCOSUR, making up over 70% of the organisation’s GDP. Although Germany is a benign hegemon in Europe, a power imbalance as distinctive as this is likely to prevent successful economic co-operation and integration as per the European Union as Brazil can simply dominate discussions. Evidently, as such, there is both a global lack of desire to follow the European model and a general understanding that it is untenable for most states. The success of regional monetary unions appears to require either a pre-existing similar approach to fiscal policy, or the transfer of fiscal policymaking to supranational regional institutions. This may seem particularly unlikely in a current environment tending towards populist nationalism and protectionism, ranging from the recent Latin American ‘pink tide’ to the UK’s vote to leave the European Union.
security
SECURITY
However, arguably part of the initial EU model was regionalism for the purpose of security. Part of the goal of the US in helping to form the EU was to prevent France and Germany entering future conflict by ensuring their interdependence. Regional Organisations such as the Shanghai Co-Operation Organisation (SCO) have similarly emerged in order to ensure collective security of members like Uzbekistan and Russia.
politically
POLITICALLY
Regional cultural differences are also a reason for which the EU cannot act as a model for political regionalism. The EU typically externally presents itself as a paradigm of “soft-power”, enforcing local standards of human rights via the ECHR and having its own supranational judicial system via the CJEU. Attempts have been seen to be made by some organisations towards political regionalism, such as the Arab League’s condemnation and expulsion of the Syrian regime from the organisation. However, there is much diversity within the area, ranging from traditional monarchies such as Saudi Arabia to authoritarian governments and revolutionary governments like Egypt and Libya. This meant, for instance, in the case of Syria the observation / monitoring missions in Damascus by the organisation failed to last after disagreements amongst the politically diverse member states over Western interference in Arab affairs arose. As such, further political integration is unlikely to follow the EU, whose model suggests that economic interdependence and monetary union leads to a fiscal vested interest in the external reputation of constituent states. The inherent, fundamental disagreements between many of these nations on matters such as human rights ultimately makes the EU an unlikely model for political integration. This is most significantly because it implies pooled sovereignty, with particularly developing nations being likely to fiercely protect their sovereignty having only attained constitutional independence relatively historically recently.
fostering cooperation and peace
FOSTERING COOPERATION AND PEACE
The AU – its main role is to “accelerate the process of integration in the continent to enable it to play its rightful role in the global economy while addressing multifaceted social, economic and political problems, compounded as they are by certain negative aspects of globalisation”
aims to rid the continent of the remaining vestiges of colonisation and apartheid
promote unity and solidarity among African states
coordinate and intensify cooperation for development
safeguard the sovereignty and territorial integrity of member states
promote international cooperation within the framework of the UN
Arab League – to encourage cooperation and the pursuit of common interests among Arab speaking states in Africa and the Middle East
ASEAN – to promote peace and stability in the region, a similarity is that both were founded to promote peace. The EU was founded, after two disastrous world wars, to prevent the recurrence of war in Europe and to institutionalise peace through economic integration. Asean was founded to create a peaceful environment in South-east Asia so that the Asean countries could focus their energies on their economic development.
ASEAN - in the aftermath of the 1997 Asian Financial Crisis, Asean, together with China, Japan and South Korea, launched the so-called Chiang Mai Initiative. The project brings together the 13 finance ministers and central bank governors. Their agenda is to promote greater financial cooperation among the 13 countries.
sovereignty
SOVEREIGNTY
The EU has a much greater impact on sovereignty than other regional organisations
Finally, the impact that each type of regionalism has on sovereignty is another key difference. Political regionalism tends to challenge sovereignty considerably more than economic regionalism. It tends to have supranational bodies, such as the EU’s Parliament and Commission, whereas states within economic regionalism can withdraw far more easily and can choose not to uphold agreements, meaning their sovereignty is less restricted. The way in which political regionalism restricts sovereignty far more than economic regionalism can be seen within the EU. Since 1983, through its Common Fisheries Policy, the EU has regulated the amount of deep sea fish that could be caught with a system of quotas and has allowed fishing boats from different member states to have equal access to each other’s fishing grounds. This was at the centre of the landmark ruling in the 1990 Factortame case, in which a Spanish fishing company called Factortame sued the UK government for restricting its access to UK waters. The law lords ruled that the 1988 Merchant Shipping Act, which the government was using to justify his actions, could not be allowed to stand because it violated EU law. This case established the primacy of EU law over an Act of Parliament, demonstrating that state sovereignty is often heavily undermined within political regionalism.
ASEAN has no equivalent of the EU’s strong supranational institutions such as the European Commission
Asean is an inter-governmental organisation. The EU, in contrast, is a supranational organisation in which its member states have agreed, in certain areas, such as trade, to pool their sovereignties. In other words, the member states have voluntarily agreed to give up part of their sovereignty. The pooled sovereignty is exercised by the European Commission on behalf of the member states.
NAFTA – able to withdraw as soon as they decide it is no longer in their interests to stay, e.g. Trump planning to withdraw from NAFTA but then rewriting the deal and staying, whereas the EU requires procedures to leave as seen in the Brexit process
