1 / 30

The Political Economy of Regionalism

The Political Economy of Regionalism. April 20, 2006 Regional Anatomy I Ken JIMBO. Review 1) Defining “ Regionalism ”. Cognitive definition

maegan
Download Presentation

The Political Economy of Regionalism

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Political Economy of Regionalism April 20, 2006 Regional Anatomy I Ken JIMBO

  2. Review 1)Defining “Regionalism” • Cognitive definition A complex of attitudes, loyalties and ideas which concentrates the individual and collective minds of people(s) upon what they perceive as ‘their’ region. • Functional Definition: A functional relation that bundles multiple nations with their political, economic and cultural inheritance, often based on the geographical advantage

  3. Review 2)Why ‘Regionalism’ matters? • Deepening and widening process of globalization made ‘region’ in the different context • How the current process of regionalism is different from ones of decades ago? • Were there any historical trends or waves of ‘making of a region’?

  4. Historical Background of Regionalism • Rise and Fall of Regionalism • The First Wave: 1960’s • The Second Wave: 1980-90’s • The Third Wave (?): 2000’s Jagdish Baghwati “Regionalism and Multilateralism: an Overview” (1993)

  5. Stages of Regional Integration • Free Trade Area • Eliminatingmutual trade barriers but maintaining external tariffs • Customs Union • Free trade area plus common external tariff • Common Market • Customs Union plus free movement of Capital (ie Labour; Technical harmonization) • Economic Union • Common Market plus Coordination of policies and freedom of services, single currency • Political Union • Economic Union plus Common Policies BELA-BALASSA, 1961

  6. Scheme Free Intra- Scheme Trade Common Commercial Policy Free Factor Mobility Common Monetary & Fiscal Policy One Government Free Trade Area O X X X X Customs Union O O X X X Common Markets O O O X X Economic Union O O O O X Political Union O O O O O Schematic Presentation of Regional Integration

  7. Sources of Regionalism Welfare of Members Preferential Trade Agreements (PTAs) can enhance members’ welfare if these arrangements create more trade among members than they divert from efficient producers outside PTAs 0 % $100 Product 0% tariff : $100 100% tariff: $200 100 % Free Trade plus Customers Union

  8. Trade Creation / Diversion Effect After joining the customs union, the tariff inclusive price of imports from Australia rises, but the price of imports from France remains the same. (F: France / Aus: Australia) The two red triangles represent the positive welfare gains from the trade creation effect (p: price / t: tariff)

  9. GATT/WTO Rules and PTA • GATT / WTO Rules • An essential characteristic of WTO is non-discrimination between members. • Under the “most favored nation” (MFN) clause, a WTO member must extend to all other WTO signatories the trade concessions made to any one member.

  10. GATT/WTO Rules and PTA • Regional Trade Agreements • There are some exceptions to the MFN rule, which allow countries to apply lower tariffs to imports from particular countries. • GATT Article 24 • …such union or agreement shall not on the whole be higher or more restrictive than the general incidence of the duties and regulations of commerce applicable in the constituent territories prior to the formation of such union (CU) and Free-trade Area...

  11. GATT Rational of Regionalism • Characteristic of National Economy • Cultivation of National Industry • Consistent with GATT Ultimate Goals • Deeper integration would be achieved simultaneously within those areas where politics permitted faster movement to free trade under a strategy of full and time-bound commitment

  12. The First Wave of Regionalism • Background • 1950s/60s: considerations of the sustainability of the nation-state • Post-Colonial nation building process • Regional Frameworks • Western Africa Economic Community (1956) • Central-Latin America Free Trade Association (1960) • Central America Common Market (1960) • Caribbean Free Trade Union (1965)

  13. Rise and Fall (Collapse) ofFirst Wave Regionalism • Member States • Small and Medium-sized Economy • Limited ‘Trade Creation’ Effect • Diluted Regional Dynamism • “Trade Substitution” • Protection of Regional Industrial Sector • Failure in Economic Development • Limited-Scale of Industrial Transformation • Limited-Scale of Technological Innovation

  14. “The Obsolescence of Regional Integration Theory” Ernst Haas, 1975 • The failure to replicate the European experience elsewhere • National governments continued to be powerful actors • outside the region – eg: in international relations • inside the region – not transcending the national but instead intergovernmental where national preferences and power remained more important that the region as an actor • Towards concepts of (complex) interdependence

  15. The Rise of the Second Wave of Regionalism • Europe • European Union (1993) • North America • NAFTA (1989) • Asia-Pacific • APEC (1989) • ARF (1994) • Southeast Asia • ASEAN Free Trade Area (1992) • Latin America • Mercosur (1995) • Persian Gulf • GCC (1981)

  16. Background of the Second Wave Regionalism • Weakened GATT Regime • Declining of US Economic Hegemony (cf. Robert Keohane, After Hegemony) • Increasing Complexity of Interest Coordination: “Transaction Costs” • Increasing Sectors: Finance, Insurance, Tele-Communications, Services, IT…etc • Rise of “Developmentalism” Model • From “Trade Substitution” to “Developmentalism” (cf. Yasusuke Murakami, Anti-Classical Theory of Political-Economy) • “East Asian Miracle” (World Bank) and Rise of Asian Economy

  17. Logic of Dynamic Growth Model • Source: Esko Antola POLITICAL UNION COMMUNITY METHOD TECHNICAL HARMONISATION SINGLE ACT DEFENCE? ENLARGEMENT CUSTOMS UNION INTERNAL MARKET INSTITUTIONAL REFORM MARKET HARMONISATION WHITE PAPER ECONOMIC AND MONETARY UNION ECONOMIC AND MONETARY UNION 1958 1968 1972 1979 1985 1992 2000

  18. Characters of Second Wave Regionalism • Mega-Regionalism • Participation of Large-scale Economy (US, EU, Japan, China) • Nested-Box Model (Yamamoto, Kikuchi) • Global Institution (GATT/IMF) – Mega-Regionalism－Sub-Regionalism • Open Regionalism • Harmonization with Global Institutions/Frameworks • Non-Discriminatory Trade Liberalization • “Soft-Regime” Building

  19. Stagnation of Second Wave Regionalism? • Stagnation of WTO Process (Global) • Doha Round Process • Seattle Meeting (1999) • Cancun Meeting (2003) • Hong Kong Meeting (2005) • Stagnation of APEC Process (Regional) • Bogor Declaration (1995) and Follow-on Process • Rise of Bilateral FTAs (Bilateral)

  20. Rise of Bilateralism? • Flawed Effectiveness of ‘Open Regionalism’ • Inclusiveness vs. non-criteria • Consensus vs. ineffectiveness • Rise of Bilateral Rational Choice of Government • Bilateral FTAs • Ad-hoc Cooperation • Functional Cooperation

  21. Rise of the Third Wave of Regionalism? Level of Cooperation/ Integration Third Wave Regionalism ? Second Wave Regionalism Timelines

  22. Globalism / Regionalism / Bilateralismand the ‘Recursion’ of the Region Economic Sphere Security Sphere Global FrameworkGATT / IMF UN / Multinational Mega-Regionalism APEC ARF / OSCE Regionalism EU / ASEAN +3 EU / ASEAN Coalition Multilateral FTAs Anti-Terrorism Bilateralism Bilateral FTAs Bilateral Alliance

More Related