Multi-Track Strategies of the Major Powers On, and Against, Regional Integration(s)

01 December 2003

The externally oriented motivations for creating stronger regional economic groupings between developing countries, and seeking forms of political cooperation between their governments and between their peoples organisations, are aimed in part to empower participating countries to position themselves more effectively in a difficult and even hostile international economic and political system. This includes the need to deal together with the strategic aims and divisive tactics of powerful foreign governments, particularly of the European Union and the United States.

The two major global economic powers are notable for their utilisation of multilateral instruments to further their interests [see AIDC Regional Briefings 2 and 3]. But they are, at the same time, locating these within multi-track approaches to maintain their economic dominance over the rest of the world. The US government is particularly notorious for its recourse to their own unilateral demands and what are called 'extra-territorial' actions in the economic and political as in the military sphere. The strategies of the EU, while rather less blatant than the US, are also characterised, like the US, by the employment of bilateral engagements and agreements and economic and political pressures upon other governments. And both the EU and the US utilise regional strategies

  • on the one hand to strengthen their own economies for their ever more powerful united positioning in the so-called 'single integrated open global economy' that they are simultaneously foisting upon the rest of the world; and
  • on the other hand, to undermine the actual and potential regional strategies that other countries need in order to be able to deal more effectively with the pressures from and challenges in the global economy.
  • The Geo-strategic Regions of the Major Powers

    The European Union is one of the oldest and so far the largest and most far advanced regional integration project. This process started well before the era of the liberalised global economy and was, in fact, initially motivated largely by intra-European security and political stability, economic reconstruction and social concerns after the Second World War. It was both politically-directed and market-driven within the then-dominant social-democratic system and state-regulated economic model. In the more recent period, as the demands of revived corporate and expanded financial forces came energetically to the fore within the EU and internationally, individual European governments and the aims and policies of the European integration project were adjusted accordingly to engage with and promote a 'free trade' 'open' global economy. This was particularly necessary to be able to counter the newly industrialised economies in East Asia or elsewhere. Thus, Greater Europe is now a geo-economic and geo-political power base from which European companies can operate more forcefully in the highly competitive global economy, and the European states can together engage with much greater combined weight in international institutions.

    The North American Free Trade Area (NAFTA)is the regional economic and to some extent political power-base that the United States has constructed around itself. This was, from the outset, a more direct response and instrument to promote, influence and engage more competitively within the global economy. Even as the Uruguay Round (UR) of trade negotiations dragged on, during the later 1980s, the US was actively securing its free trade area with Canada and planning the consolidation and extension of its broader regional base into the Americas, starting with Mexico. At that time, this regional strategy may have been something of an insurance policy, in case the UR did not yield global terms conducive to US national economic and strategic interests. Since then, the central WTO agreements created through the UR and after - and largely through determined US interventions - have turned out to be very favourable to US national and corporate needs/aims. NAFTA is, however, still proving to be a useful complement to the US economy and support to US corporations.

    • Both the EU and NAFTA are important ground bases for their transnational corporations to engage with and within the global economy. Most TNCs continue to maintain the core of their activities, and their most strategic operations, in their countries of origin. Fully 87% of all TNCs are head-quartered in the EU, the US and Japan and, in the late 1990s, 88% of their 'foreign assets' were actually located in each other's economies. Similarly, 84% of all foreign direct investment (FDI) originates within these and the other members of the OECD (Organsation for Economic Cooperation and Development) grouping of the most developed economies. But 60% of global FDI moves between the most industrialised countries of Europe and North America. At the same time, however, the governments in these giant economic blocks are determined to act internationally to support their companies to dominate all other markets, open up ever more profitable investment fields and production bases throughout the world, and secure their access to strategic resources.
    • These regional groupings also provide useful frameworks within which the US and the EU can achieve common positions with their key economic partners/neighbours on trade terms, investment norms, property rights and production/labour market requirements, and other issues. These are easier to agree upon within a more limited, more cohesive regional grouping than in full multilateral global negotiations, which are more complex and potentially more contentious, as is becoming more and more evident within the WTO. At the same time, however, the regional agreements/practices within NAFTA and the EU can set significant precedents and can be utilised to exert influences or pressures upon the broader multilateral processes. In this way, states and other interests within such regional economic power blocks are positioned to obtain the best of both worlds - the regional and the global.

    Competing Interests between the US and EU Regional Blocks

    In so far as the ideology of free trade and an open global economy are most advantageous to the strongest economies, there is a uniformity of language between their governments, and with their neo-liberal theorists and institutions, and a general unity of purpose at a global level. However in practice there are also conflicting interests - and tensions - between these global powers; most recently and blatantly in relation to the Middle East.

    • However the direct competition between the EU and the US even starts in each others respective regions or 'their' immediate zones. Thus, even as the EU is consolidating its interests and moving towards the integration of the whole of Europe, the US government and US corporations are very active within the EU and throughout greater Europe. Similarly, the EU is very active in Canada and has recently secured a highly favourable free trade agreement with Mexico although it is a backyard member of Washington's own North American regional block.
    • This competition between the EU and US extends to other further regions of the world such as APEC, the Asia-Pacific Economic Cooperation zone. Japan is already well-established throughout Asia but the US has long been trying to push APEC towards becoming a full free trade area in order that US companies can compete more effectively with Japan. However, in an Asian Free Trade Area, companies from NAFTA - and Australia - as 'Asia-Pacific-rim' countries would also enjoy prior penetration and more favourable positioning compared to Europe and thereby a predominant influence in Asia over European companies. Because Europe is not a member of APEC, Brussels is energetically promoting its ASEM (so-called Asia-Europe Movement) to create its own region-to-region accords and bilateral agreements between the EU and as many Asian countries as it can. This competitive thrust is directed not only at the Asian giants, India and China, but also at Australia. This is a sizable developed economy in the zone where Europe, for historical reasons, has long had a preponderant presence but where it is now threatened by a comprehensive US-Australia FTA.
    • Europe is also concerned about Washington's energetic pursuit of more targeted bilateral free trade and investment agreements with other key countries in the Asia-Pacific region and especially the Association of South East Asian Nations (ASEAN). This regional grouping includes a number of large economies with enormous potential, such as Malaysia, Indonesia and the Philippines - but which are also rather 'troublesome' to the US and the EU in the WTO context. Thus, the more 'cooperative' ASEAN countries now being targeted by the US include
      • Singapore as a key developed economy within ASEAN and a channel through which the US can 'infiltrate' and influence this grouping
      • Thailand, which the US director of international trade (USTR) has targeted for an FTA as one of Washington's instruments through which to "dock in" other economies in South East Asia into America's broader free trade sphere.

    Such offensive/defensive strategies between the US and the EU, and their 'inter-imperialist' rivalries in the rest of the world, are expressed in emerging 'neo-mercantilist' trade wars building up between such economic 'empires'. Each is striving to pre-empt the other(s) by carving out - if not formal colonies, as in the past - then at least de facto spheres of preponderant influence. This is also evident in their parallel predatory strategies towards existing and emerging regional groupings in Latin America and Africa and other parts of the South.

    Parallel Strategies against Regional Groupins in Latin America and Africa

    • The US is driving towards the extension of its NAFTA base into a vast Free Trade Area of the America's (FTAA) incorporating all thirty-four countries from Canada in the far north to the tip of Chile in the south. At the same time, in the face of some resistance from some Latin American governments, and even more so from a wide Hemispheric Social Alliance (HSA) of peoples organisations, Washington is pursuing an incremental take-over of the entire hemisphere by targeting key countries, such as Chile, and 'mopping up' smaller countries through sub-regional free trade agreements such as the Central American Free Trade Area (CAFTA). The US is similarly targeting the nearby regional grouping of Caribbean islands, the Caribbean Community (CARICOM), which has long been one of Europe's own historic spheres of influence.
    • More ambitiously, the US is determined to incorporate into its vast hemispheric free trade area the gigantic Common Market of the Southern Cone (MERCOSUR, a regional grouping in South America consisting of Brazil, Argentina, Uruguay and Paraguay, with Bolivia as an associate member and oil-rich Venezuela applying to join. And, as elsewhere in the world, the EU is in direct competition with the US in trying to secure its own free trade agreement with MERCOSUR. But the importance to both of them in capturing MERCOSUR is
      • as always, to open up its huge markets and rich resources even more fully to the trade penetration, and unfettered investment ventures, exploitation and spoliation by US and European corporations, but
      • more offensively even, to prevent this grouping from becoming a powerful base of resistance and a potential framework for a different model of effective and equitable, self-sustaining and sustainable development.
    • Although there is no single economy or region in Africa that can at this stage compare with MERCOSUR in size and strategic significance, Africa as a whole and/or through its sub-regions has to be secured as a future privileged sphere of intensified exploitation ... as in the 19th century 'scramble' for the continent. This time round, both the EU and the US are part of this carve-up, each pursuing its own divisive FTA and anti-regional strategies in Africa. As in Latin America and Asia, both Washington and Brussels are using the same combination of bilateral agreements with stronger "pivotal" countries to "dock in" others, or even creating direct regional agreements with groupings of smaller and weaker countries. For example
      • The US has secured a bilateral free trade agreement with a significant economy like Chile in South America as an extreme FTA model and influence upon the rest of the continent. And the EU has secured its own free trade agreement with South Africa as the most significant economy in Africa, an agreement which it is also using as a model and as an influence in the rest of the continent [see AIDC Trade Briefing 1].
      • The EU is building its own economic extension into North Africa through its bilateral agreements and regional plans for the 'Euro-Med' area. And the US, too, has secured its own highly advantageous and comprehensive economic-political-security agreement with Morocco, and is actively pursuing the same with Egypt as another key North African country.
      • The EU has secured its comprehensive so-called Trade and Development Cooperation Agreement with South Africa, which as a free trade agreement directly affects Botswana, Lesotho, Swaziland and Namibia, fellow members with South Africa in the Southern African Customs Union (SACU). And the US is now pursuing its own comprehensive agreement with the whole of SACU [see AIDC Trade Briefing 2].
      • The EU is pursuing its own comprehensive reciprocal free trade agreements through so-called Economic Partnership Agreements (EPAs) with all 77 African Caribbean and Pacific (ACP) countries - possibly individually, but for the EU preferably in regional groupings [see AIDC Regional Briefing 5]. And the US has launched its own competing initiative, which it calls the African Growth and Opportunities Act (AGOA). This offers African countries - or those that comply with Washington's economic-political-security requirements - 'preferential' access (for a limited period) into the vast US market [see AIDC Trade Briefing 3].

    However, together with the competing thrusts by the EU and the US into Africa, and other countries in the South, there are also commonalities and convergences in the content of these comprehensive agreements that they are getting African and other governments to sign onto. And these pose significant challenges to peoples' organisations everywhere.

    Convergent Economic Power Interests and Common Strategies

    The major powers have always utilised the above multi-track strategies to maintain their dominant positioning in the world, and their methods have also always included direct and indirect, overt and covert, legal and illegal, economic and political, and other (military) means as necessary. And these economic and political methods have also been evident in their operations in the so-called 'trade sphere' and in the WTO in particular.

    However, in the context of

    • the effectiveness of highly informed NGOs, trade unions and other concerned organisations and progressive research institutes in exposing the aims, nature and effects of the WTO's 'multilateral' rules and agreements on developing countries - and on the world;
    • the growing public awareness throughout the world of the anti-developmental and anti-democratic functioning of the WTO, and its long-standing manipulation by the major powers in offensive pursuit - and defensive protection - of their own interests;
    • the more informed and assertive alliances within and between various tactical and strategic groupings of developing country governments in the WTO, and the consequent set-backs to the plans of 'the majors' in the Third and Fifth WTO Ministerial conferences in Seattle (1999) and Cancún (2003) respectively; the US and the EU are, more than ever before, each having recourse to their own simultaneous unilateral, bilateral and regional 'trade' agreements, outside of the WTO, in pursuit of their specific interests.

    However the commonalities between the major powers and within their strategies are also clear in the evidence that

    • The majors are selectively using the WTO's 'multilateral' rules in the bilateral and regional agreements that they are pursuing, but are also going well beyond the WTO to impose terms and conditions that have not been agreed within the WTO (such as the notorious new 'Singapore Issues', for example on investment liberalisation), and that are being energetically resisted in the WTO by many developing country governments, backed up by the interventions and pressures of popular social movements.
    • The so-called 'free trade agreements' being imposed on countries throughout the world are not only about trade and go well beyond trade to include the liberalisation of capital flows and the free movement of foreign investors, as well as their property and 'intellectual property' rights, their access to government procurement and privatised national assets, and the general de-regulation and 'opening up' of the economies of countries signing onto such agreements.
    • The so-called bilateral FTAs being secured with key individual countries are also designed as openings or breaches through which to get into and influence the respective regional groupings (as with Singapore in relation to ASEAN, or South Africa within SADC), or to "dock in" neighbouring countries and possibly create new, more amenable and much larger 'open regions'; as US trade strategists state to be their vision in relation to the whole of Africa through agreements with individual African countries, starting with AGOA.
    • Many of these so-called bilateral (that is country-to-country) agreements are actually between regional groupings on the one side and individual countries on the other; and, what is more, such agreements are between very large and powerful regional groupings and relatively smaller and weaker economies, as in the case of the EU's so-called bilaterals with South Africa and with Mexico.
    • Even where the majors are pursuing inter-regional trade agreements, between their own and other regions, as in the case of the EU and MERCOSUR, the EU and SADC, the EU and the East African Community [see AIDC Regional Briefing 5], or the US in relation to SACU, these too are still very imbalanced in the resources that the respective negotiating 'partners' can draw on; and the consequent agreements will inevitably reinforce such inequalities.

    It is through all such complementary unilateral, bilateral and so-called regional strategies that the majors are aiming to penetrate, hijack and transform existing and potential regional groupings of developing countries, empty their programs and policies of development content and pre-empt them from becoming frameworks for more self-sustaining, sustainable and equitable development, and stronger economic and political bases from which such countries can deal with the dominant world powers and their global system and regime.