New Dimensions in Regional Integration an Essential Aspect of Diplomacy

By Dr. Srimal Fernando | Published: 2:00 AM Apr 19 2021
Columns New Dimensions in Regional Integration an Essential Aspect of Diplomacy

By Dr. Srimal Fernando 

The past century has seen regionalism undergoing many changes and hence the term ‘regional integration’ has also come to be linked with numerous connotations. Regionalism has been seen as an expansion in promoting integration among States. Likewise new regionalism is frequently seen as an alternate to multilateralism. There are diverse advantages of regional integration. According to certain theorists, the prospect of economic gains characteristically related with regional integration is a vital feature that offers the impetus for integration. 

Other theorists with divergent views debate that the political characteristics of integration are a vital feature, of effective regional integration. The decision-making procedure of such an organization plays a key role in its effectiveness. Among other factors, States are frequently driven to be involved in regional integration initiatives due to the prospects of welfare benefits. After the   LAFTA and the SARC the EU, ASEAN and NAFTA are amongst the topmost regional integration models in the international economy.  An in-depth interpretation of the term ‘region’ is vital for a comprehensive analysis of regionalism.

South Asian Association for Regional Cooperation (SAARC)

The evolving global developments, the increasing regional arrangements and the enhancement in liberalising regional economies provided the stimulus for promoting economic integration between the SAARC Member States. Overall, trade in this region is chiefly influenced by extra-regional trade which has contributed to low levels of intra-regional trade. This is mainly owing to policy limitations that have been implemented by South Asian nations. This has repressed the movement of labor, capital and trading goods. Nevertheless, the stimulus of regional integration endeavors subsequently varied in both models of integration. 

SAARC has no doubt made some noteworthy advancement in its efforts towards progress the South Asian region. As SAARC continues to maintain strategies for strengthening cooperation, a critical tool that can be utilised to examine how SAARC can be transformed into a powerful regional grouping is by an in-depth study of  South Asian Free Trade Area (SAFTA) which became effective on the 1 January 2006. The SAFTA has ventured to upsurge economic collaboration between its Member States. However, these efforts have been compromised by numerous challenges that have led to unproductive results. 

As the eight States of South Asia are highly reliant on trade and economics, regional collaboration among Member States requires a common economic commitment via diplomatic channels. Given that regional integration could promote economic development and can be seen overall as a method to promote the competitive advantage of small South Asian economies alongside the rest of the region, it is essential that South Asian nations jointly collaborate with each other to strengthen trade within the region. It is notable that without South Asian Governments’ undertaking to bring in policy reforms and further integration-related initiatives, any attempt intended for achieving efficient regional and economic integration will fail to increase economic welfare in this region. Furthermore, South Asian States need to realise the importance of jointly uniting their strengths and assuring that SAARC’s policies are aligned in a way that boosts the well-being of the entire region.

Lessons for developing nations from the EU integration

The European Union (EU)  integration is an exemplary model of an effectively established economic union that can set the pattern for other regional integration arrangements across the globe, especially for developing regions. Nevertheless, numerous efforts at realising regional integration in many developing regions have been unsuccessful due to numerous causes. Several regions that have endeavored to imitate the European integration model have been futile given that these States lacked the resemblance of economic structures that the EU had during the process of integration.  

The accomplishments of the EU were reliant on the capability of political elites in the Eurozone to sustain a common interest in integration. There are numerous other supranational organizations that have also been established in the EU, for example, the EU Parliament and the Court of Justice. In the European case, regional institutions and the administrations of the European nations contributed the energy behind the integration. It is apparent that the EU is a model of a flawlessly functioning regional integration arrangement with an efficient administrative system that manages the union. 

Regional integration experiences in East Asia

ASEAN has made noteworthy progress concerning policy arrangements among members and intra-regional trade between Southeast Asian nations accounting for an estimated 55 per cent of its total world trade. Remarkably, ASEAN has succeeded in its efforts for economic integration. 

Since the 1990s, China’s emergence as a global economic power has impacted ASEAN in many different ways. This resulted not only in the redirection of FDI inflows from Southeast Asia to China but also led to the takeover of the region’s export market by China. This also led Association of Southeast Asian Nations (ASEAN) to comprehend the significance of accelerating AFTA’s initiatives directed at forming a single market economy in the region that would attract more FDI inflows.

In the Southeast Asian case, the markets of ASEAN member countries and regional corporations provided the stimulus behind regional integration.  Markedly, the ASEAN model of integration is mainly founded on the Member State Governments’ cooperating and pledging allegiance to the ASEAN Free Trade Area (AFTA). Compared to other regional integration arrangements in the developing parts of the world, the model of integration in Southeast Asia was more appropriate for a market driven integration approach. This has been endorsed by corporations and the markets inside the region, which has been further improved by production networks within and outside the region. 

Regional integration under the North Atlantic Free Trade Agreement (NAFTA)

Founded in 1994, NAFTA is a trade agreement between the countries of the USA Canada, and Mexico. Its creation brought about not only enormous alterations in Mexico’s economy but also in its social and political structures. It also opened up the Mexican market for merchandises to U.S. and Canada. The heightened interdependence in the financial and economic sectors has provided the stimulus for broader collaboration with the objective of increasing the institutional capacity of NAFTA’s Member States. 

However, NAFTA’s impact can be thought to be both advantageous and disadvantageous. At the outset, it has played a vital role in remodeling the Mexicos’ economy leading to its emergence as one of the top global exporting nations. It has also ensued increased FDI to Mexico with the establishment of a favorable environment for foreign investors and has promoted diversification in Mexican production, which was primarily over-reliant on oil in comparison to its regional counterparts such as the EU.  The extent of formal collaboration under an institutionalised framework in NAFTA is low. The assessment of integration under the NAFTA framework however offers pragmatic lessons for forthcoming integration efforts by the South Asian economies. 

Regional integration in Latin America

Similar to other developing regions across the globe, arrangements to regionally integrate the Latin American nations is a contemporary phenomenon.  The initial attempts towards regional economic integration in Latin America saw the creation of the Latin American Free Trade Agreement (LAFTA).  

The Latin American nations, in recent years have re-initiated attempts to promote economic integration among its involved nations. The United Nations has spearheaded the notion of creating a broader common market for Latin American nations. 

Regional Integration as fundamental Future Discourse 

Notwithstanding contradictory schools of thought that may hamper a convincing classification of a region, this discourse on regional integration has been principally focused on the sovereign involvement of the relevant actors in the progression of regional integration and the political amalgamation of involved members. Debatably, formal regional organisations and institutions are vital features of comparative regionalism. The imperatives behind the formation of regional Institutions such as EU, ASEAN and SAARC subsequently guaranteed that it intended to promote the spirit of political and economic collaboration by bringing the nations of the region onto a shared platform. 

About the Author

Dr. Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O. P Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is also an Advisor/Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He has received accolades such as 2018/2019 ‘Best Journalist of the Year’ in South Africa, (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union’.

By Dr. Srimal Fernando | Published: 2:00 AM Apr 19 2021

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