Different Forms of Regionalism

Attempts to differentiate types of regionalism fall into three categories: economic, security and political.

• Economic regionalism focuses on the financial and trade aspects of regional co-operation. These types of regional organisation are trade blocs of one type or another; the vast majority of countries now belong to a regional trade bloc.

Security regionalism involves regional organisations trying to achieve peace and security through one of two methods. Some aim to achieve stability within the group by enhancing interdependence and interconnectedness, making war impossible due to the closeness of interactions between member states. Others seek to achieve peace through binding the member states against a common enemy. ASEAN was originally viewed in this way, as the five original members had a shared fear of the growth of communism in South East Asia.

• Political regionalism is when states that share the same values seek to protect them, and to enhance their standing and voice in the world. Both the AU and the Arab League had their foundations in this type of regionalism.

One difficulty with this categorisation is that there is considerable overlap between the three types of regionalism, and they tend to feed each other. Security is achieved through economic co-operation; protection of values is achieved through security and economics. Regional organisations also develop over time and become more integrated. They may start out as one type of organisation, but adapt and become another type later.

New Regionalism

Since the late 1980s, there has been a resurgence in regionalism, often seen as regionalism’s ‘second coming’ and associated with what is called the ‘new’ regionalism. New regionalist projects, which began about the mid-1980s, differed in substance from the earlier rise in regionalist developments, which had begun about the 1950s and later became known by the term old regionalism. New regionalism is the formation of trading blocs rather than a deep integration such as the EU. These trade blocs operate as regional economic spaces through which states can interact, rather than being drawn into EU-style supranational experiments. Between 1990 and 1994, GATT was informed of 33 regional trading arrangements, nearly a third of those that had been negotiated since 1948.

In 1991, the signing of the Treaty of Asuncion led to the formation of Mercusor, which links Argentina, Brazil, Paraguay and Uruguay and, with Venezuela’s application for full membership awaiting final ratification and Chile, Columbia, Ecuador, Peru and Bolivia as associate members, constitutes Latin America’s largest trade bloc.

1992 saw the signing of NAFTA, which came into force in 1994, linking Canada, Mexico and the USA.

1993 witnessed both the ratification of the Treaty of European Union (the TEU or Maastricht Treaty), which transformed the European Community into the European Union, and the introduction of the ASEAN Free Trade Area. 1994 saw an agreement to build the Free Trade Area of the Americas, as a proposed extension to NAFTA, designed eventually to encompass North and South America.

This surge of economic regionalism was driven by a variety of often disparate factors. In the first place, it reflected the wider acceptance of export-led economic strategies across the developing world, as more countries were inclined to follow the lead, first, of Japan and later of the Asian ‘tiger’ economies. Second, the end of the Cold War encouraged former communist countries to view economic integration as a means of supporting and consolidating their transition to the market economy, a development that later gave rise to the eastward expansion of the EU. Third, the establishment of the WTO and the growing influence of other institutions of global economic governance persuaded many countries that regionalism was a way of gaining greater influence within multilateral bodies. Fourth, the USA’s transition from being a sponsor of regionalism to being an active participant gave the process considerable additional impetus. Finally, and underlying all the other factors, was the acceleration of globalization in the 1980s and 1990s. Regionalism became increasingly attractive as rapidly expanding global capital flows and an increasing trend towards transnational production patterns appeared to undermine the viability of the state as an independent economic unit. Regionalism was thus reborn as a mechanism through which states could manage the effects of globalization.

Are regional trade blocs ‘building blocks’ or ‘stumbling blocks’ within the global system? Bhagwati (2008)

Defensive Regionalism

One motivation for economic regionalism has been essentially defensive, in that regional bodies have sometimes embraced protectionism as a means of resisting the disruption of economic and possibly social life through the impact of intensifying global competition. This gave rise to the idea of the region as a fortress, as in the once-fashionable notion of ‘fortress Europe’. The near-simultaneous creation of NAFTA, the formation of the EU and the development of an ASEAN Free Trade Area have, for instance, been understood in these terms, creating a spectre of a world of competing regional blocs. In some cases, defensive regionalism has been a bottom-up process, driven by sub-national or transnational interest groups, such as agricultural interests across the EU and in the USA. A particularly significant concern within the EU has been to protect the European social model, characterized by comprehensive welfare provision, from a ‘race to the bottom’ ignited by neoliberal globalization. In this sense regionalism is a reaction to and an impediment to globalisation.

Competitive Regionalism

Nevertheless, ‘new’ regionalism has been motivated by competitive impulses, and not merely protectionist ones. In these cases, countries have formed regional blocs not so much to resist global market forces but, rather, to engage more effectively with them. Although states have wished to consolidate or expand trading blocs in the hope of gaining access to more assured and wider markets, they have not turned their backs on the wider global market. This is evident in the growth of cross-regional interaction and attempts to influence the WTO and other bodies. The fortress model of regional integration has been weakened by the fact that regionalism has tended to march hand in hand with economic liberalization. In embracing the market, competition and entrepreneurialism, regional trade blocs have tended to be open and outward-looking, interested in engaging in global, not merely regional, free trade.

In balancing competing impulses towards defence and competition, regional blocs have functioned more as filters, resisting particular threats to internal interests and priorities, rather than as fortresses.

The result of economic regionalism is that, instead of a common, global free trade system, there is a bewildering array of complex and overlapping bilateral and regional arrangements, each with conflicting and contradictory provisions, an arrangement that Bhagwati (2008) called the ‘spaghetti bowl’ system.

However, the old form of regionalism tended toward protectionist economic blocs, where trade between member countries was encouraged but trade with countries outside the bloc was discouraged by external trade barriers. In contrast, new regionalism was more open, permitting trade with countries from outside distinct regions. In this context, it was argued that this open form offered regional industries exposure to global competition and, together with other means of encouragement, the necessary incentives to compete in the global marketplace. By this argument, scholars concluded that instead of presenting obstacles to the process of increasing global integration, these new regionalist projects assisted in furthering this objective.