Current Regionalisms

01 June 2001

The Rise of Regionalisms

In the South, the rise of regionalisms has had different origins in particular continents. However there has been a common thrust to establish regionalisms in the South either to enlarge the market within the region and/or as a defence against the dominant global economies, in particular of the US. Both the United States (US) and the European Union (EU) have also pursued Free Trade, Cooperation and Partnership agreements with regions or specific countries as a strategy of promoting rapid trade and investment liberalisation.

African Regionalism

Since the birth of a democratic South Africa, regional cooperation has also been seen to be an important framework within which to address the gross imbalances created both within and between the economies of Southern Africa. The South African Development Community (SADC) had to take on board as well, the additional demand of relating its developmental needs and plans to the challenges of the liberalised global economy. The basic strategic challenge to the countries of southern Africa, in this respect, is how to use the regional framework to create an economic space within which to develop and diversify their economies. This would also allow them to prepare for and participate more meaningfully in the highly competitive liberalised global economy.

At the same time, a united region could provide a stronger collective political base from which to engage in joint strategising for more effective engagement in multilateral institutions such as the WTO or with the EU. It would also provide a venue through which to strengthen the role of the Organisation of African Unity (OAU) and to develop security and peace keeping strategies from a regional perspective and achieve a more cohesive regional voice at the United Nations (UN).

African, Caribbean & Pacific (ACP) Countries and Regionalism

The level of integration among the various ACP regions is very different, as is their dependency on the EU for trade. CARICOM (Caribbean Community) was established in 1972 and is one of the most integrated sub-regions of the ACP, working on the establishment of a single Caribbean market and economy. The EU-ACP agreement formerly known as the Lome Convention, has been re-negotiated as the Cotonou Agreement.

The EU has proposed Regional Economic Partnership Agreements (REPAs) in its negotiations with ACP countries, which would be based on both trade and aid. The potential effect of the FTA agreements needs to be thoroughly examined, acknowledging the vulnerability of the economies of many of the ACP countries. While the ACP is a minute partner for the EU, the EU is a substantial, if not the most important partner of most ACP countries. The potential impact of REPAS for ACP economies needs to be assessed, identifying their characteristics, like high dependency on agriculture and agricultural commodities for their export earnings. ACP countries would gain from FTAs if the REPAs would give the ACP countries greater access to the EU market for agricultural products. However, negotiations on the EU-South Africa FTA have demonstrated the unwillingness of the EU to make any meaningful concessions.

Asian Regionalism

Regional integration in Asia has a long history. It started with the formation of ASEAN in 1967. Originally ASEAN was seen as a platform for regional import substitution, not so much as a free trade area. However ASEAN got hijacked by the anti-communist policies against China and Vietnam and it became principally an ideological alliance. With the ending of the Cold War, ASEAN was able in early 1990s to pursue the formation of the ASEAN Free Trade Association (AFTA), with the aim of accelerating trade within the Southeast Asian region.

The South Asian Association for Regional Cooperation (SAARC) was formally established in 1985. The basic objective was to accelerate the process of economic and social development, strengthen self-reliance in the member countries through joint action in certain areas and to make the member states' voices better heard in international fora.

In the late 80s Mahathir, Malaysia's Prime Minister put forward a proposal to form the East Asia Economic Group (EAEG). The EAEG would be formed by the then 7 ASEAN members, plus China, South Korea and Japan, and was aimed at creating a wide regional market (not necessarily open free trade) with Japan playing a central role. The US reacted strongly to the EAEG because of the significant growth of inter-Asian trade in the 90s, and since Japan lacked the political will to resist the US pressure, the EAEG was set aside.

In the 90s, the economies of ASEAN and East Asia became a target of both the US through the Asia Pacific Economic Cooperation (APEC) and the EU through the Asia Europe Meeting (ASEM). ASEM was regarded by several commentators as a counterpoint to APEC, and it is the same countries as those intended to be grouped in the EAEC, who are the Asian partners in ASEM. Through ASEM, Europe has established a framework for tying the EU economies more integrally to the East Asian economies, including China. ASEM is also a useful tool in countering the US's anti-EU trade diplomacy in the Asian region. For the Asians on the other hand, ASEM seemed to have potential to counter pressure from the US in its efforts to create a trans-Pacific free trade area.

The impact of the Asian crisis has resulted in the near collapse of ASEAN and AFTA because of lack of any common approach to integration, and the challenge to governments and civil society is how to re-vitalise ASEAN/AFTA and the Asian Regional Forum (ARF). It is also important to note that the Asian crisis also generated a new initiative by the Asian countries to seek an Asian solution and establish an Asian Monetary Fund (AMF). This was again scuttled by the US but was reasserted during the Asian Development Bank meeting in Chiang Mai in 2000 at which the ASEAN countries plus China, Japan and South Korea had a separate meeting discussing the development of a joint fund. These same countries also met in a separate caucus in the preparation period before ASEM 3. These developments are a strong manifestation of the need for a regional institution addressing regional needs.

Latin American Regionalism - MERCOSUR

The formation of MERCOSUR started in 1985 when Brazil and Argentina decided to initiate regional integration and was later joined by Paraguay and Uruguay, with Bolivia and Chile as associate members. Mercosur has been shaped initially by the political economies of the participating countries and Brazil and Argentina were able to overcome historic rivalry and disagreements. It was also developed as a defensive move towards the creation of the North American Free Trade Area (NAFTA) and APEC which included Chile, Peru and Ecuador. MERCOSUR has begun to exert influence at a regional level, but this momentum has been set back with the devaluation of the Brazilian currency in January 1999. Plans to integrate Chile as a full member have also been set aside since Chile is about to sign a "free trade" agreement with the US, and is opting for the orbit of the Free Trade Agreement of the Americas (FTAA).

However, Brazil continues to take initiaitvie in giving South America a cohesion to confront US economic and military pressures in the sub-continent. In August, President Cardoso invited eleven Presidents to South America to Brasilia and made explicit a two Americas approach - one from Alaska to Panama (US dominated) and the other from Columbia to Tierra del Fuego. Not surprisingly the US has repeatedly accused Brazil of de-accelerating the rhythm of the FTAA negotiations. The Brasilia Summit served to sketch the project of the Southern Common Market that would integrate Mercosur, the Andean Community of Nations and Chile, Guyana and Surinam.

There are signs that the consolidation of MERCOSUR has produced a counterweight to the dominance of the US and has facilitated the emergence of a new agenda which aims to eventually bring about a shift of power within the region. Additionally, MERCOSUR and its members have begun to emphasise the opportunities provided by closer association not with the US but with the EU where some of its major markets are found and also with Mexico which on the other hand, has tied itself into the model of corporate driven globalisation through the North America Free Trade Area (NAFTA) and the EU-Mexico Agreement.

European Union & EU Trade and Cooperation Agreements

The creation of a united Europe was originally inspired by the notion of consolidating peace and maximizing intra European trade and investment. The European Union (EU) is the result of a process of cooperation and integration covering a period of fifty years and currently includes fifteen Member States. The EU is preparing for further enlargement towards Eastern and Southern Europe. The EU model of regional integration is gaining new attention from both Southern elites and civil society actors, since it operates a model integrating economic, political and social dimensions.

In the past ten years, the construction of a united Europe however, has taken a new orientation which undermines the aspirations and rights of citizens and is developing outside substantive democratic control. Neo-liberal policies determining economic priorities have altered the course of its original objective. The fundamental and democratic rights enshrined in the original vision of a united Europe are being dismissed and the regulatory function of the local, national and regional authorities are being dismantled while the European Commission (EC) is increasingly assuming an executive function in policy making and in determining binding agreements. In this transformation, the EU has become a corporate driven project, with citizens' interests being subordinated to the interests of profit and Transnational Corporations (TNCs). This is also being reflected in a generation of Trade, Cooperation and Partnership agreements which reflect the EU's globalisation agenda in the South.

Free trade has been the driving dynamic in the EU's approach at opening up strategic regional groupings. The European Commission (EC) has been an active proponent of accelerated free trade, generalised liberalisation and "open regionalism". This "open regionalism" is demanded by the EU without reciprocal access to Northern markets being given to countries or regions of the South. Not withstanding the EU's declarations on development, it is the free trade agenda that now seems to be dominant in its approach towards regional groupings in Southeast and East Asia - as in the EU cooperation agreement with ASEAN and in the Asia Europe Meeting (ASEM); in the South American Common Market (MERCOSUR) as well as in the Southern African Development Community (SADC) and other emergent economies. As part of this overall trend in external economic relations, the EU likewise has pursued Bi-lateral Free Trade Agreements with specific countries, like Mexico, South Africa and China.