Latin America – Evaluation of Regional Integration Efforts

Evaluation of recent LatAm Regional Integration Efforts

In view of the recent articles on Latin American integration and cooperation it is obvious to conclude that while the intent for cooperation and regional integration still greatly exists among most MERCOSUR and UNASUR members, the lack of institutional support and clear efforts by some countries (such as Brazil and Argentina) to become regional hegemons, in addition to other countries such as Paraguay to reestablish itself on the Latin American arena stalls the overall process of regional cooperation and unity in the region, while also weakening the overall Latin American presence on the global economic field.

It is known that institutions in regionalism matter. This claim is widely acknowledged nowadays by most of the scholars whether on political theory, comparative politics, or international relations.  As was discussed in the articles “Tourism trends of certain member countries have a negative effect on Mercosur” and “Paraguay, suspended from Mercosur,” where the latter has requested an observer status at the Pacific Alliance, it is obvious that Paraguay is doing what it thinks is best for Paraguay, thus pulling the blanket at itself to advance its economical strength, by trying to ally with Pacific Alliance. These examples (to name a few) demonstrate that if the required institutions were present to support member countries, to guide and to address legal matters states would not feel compelled to go after other organizations for support and trust, rather would try to solve their problems through cooperation and compromise, which in turn would promote the overall regionally unity.

Transparency also seems to be lacking in the relationship between most Latin American states, as addressed in the “Argentina promotes a delay in Mercosur-EU discussions for a free trade agreement” article, where Argentina seems to have its own agenda and view (different that of Brazil in this particular instance) of the event that took place as part of the UN summit, or when recently Mercosur and Unosur authoritative powers have influenced other organizations by turning them against Paraguay, such actions  only create uncertainty about neighbour states behavior and underlining the reputational consequences of uncooperative behavior.

Additionally, it is hard to pinpoint the exact cause of the stalled trade in the region. However, at this point two themes emerge, one is that the reason behind this stalled trade and cooperation could be the member states overall dissatisfaction with the Mercosur as an organizational institution through its lack of support mechanisms, whereas another reason could be the member’s overall mistrust with one another along with constant pushing of individual agendas. It is likely that both points could be stirring the calls of inefficiency and urges the need to expand trade to include EU and North America, such is demonstrated by recently held UN-CELAC summit and International Defense and Security Fair (LAAD), that took place in Rio, Brazil.

On the positive note however, based on the recent news reports it is also obvious that the Latin American region has a desire to cooperate, demonstrated by the multitude of regional events and talks that are taking place. However it is somewhat unclear whether the intent to cooperate with UN and North America is greater than with its local countries. Lastly, it is reasonable to conclude that until the economic needs and interests of each member state are addressed and aligned with the region’s overall strategy (via Mercosur for instance) overcoming the cooperative barriers will remain a difficult challenge.

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Final thoughts on North American Regional Integration

North America is displayed as a unique continent with just three nations compared to the other regions around the world.  At a small number countries, a regional integration would serve as the best interest for all three to grow not just economically but increase ties in social and possibly governmental structures.

Throughout history, these three nations served as former colonies of European powers in the past and have gone through some forms of war against each other as well.  Overtime, they have grown partnerships in trade and social development as well. However, there still remains the difference in development level where the United States and Canada are developed nations and Mexico remains at the developing level. The NAFTA was drafted between these three countries to boost their economic ties as well as a mutual understanding in development of labour markets and protection from environmental degradation.  But in the previous weeks of articles, we find that this collaboration effort is not as great as it should have been.

The United States is by far the driving force of the NAFTA and it seems as they have benefited the most out of the agreement. American industrialists relocated their factories into Mexico due to the lower  cost of production and higher supply of workers for a lower wage.  Because of the jobs available, there is increased urbanization of the population in the major urban centers creating socials problems. Even the agricultural business is affected as American wholesalers are only purchasing limited supply of the overall output by the farmers at a low price and restricting them from selling their products to anyone else.  It can be said that the NAFTA is more or less a harm to Mexico than a pacemaker to help it grow.  With recent election of a new president in Mexico, there could be some significant changes in regards to the trade and American influence into the country.

On the other hand, in Canada the NAFTA is only helping them through some manufacturing exports and the abundance of natural resources.  However, with the NAFTA in place, farmers in Canada are also affected in similar manner as the Mexicans but strong institutions keep them in shape and help them sell their products abroad without permanent restrictions.  Natural resources such as lumber, minerals and petroleum are attractive to the US since they are the largest consumers out of the three nations.  Projects such as a joint pipeline project was proposed to connect oil from Alaska and part of Canada in order to transfer the products.  However, these projects pose a long-term environmental threat as the permafrost in the north would be permanently affected and could increase the melting of the Arctic icecaps.  If any accidents were to occur, it would cost Canada greatly.

The future of North American regional integration is a questionable process, whether it would continue to be based on economic benefits or change towards a more supranational approach it is unknown.  But as far as we can see your right now, the problems that NAFTA has brought needs to be dealt with.

Analysis of Regional Integration in the Middle East

The recent years have seen the European Union as a successful example of regional cooperation come under serious doubt. The increasingly volatile economic environment and the chaotic, at times violent, social conditions that followed raises serious questions about the EU as a model of regional organization. Most in the international community might expect such unrest to come from the traditional hot zone: the Middle East. However, while blogging about regional cooperation in the Middle East throughout this semester, it became apparent that associations such as the League of Arab States and the Gulf Cooperation Council are quietly doing a much better job at fostering regional integration and cooperation. Despite conflicts of interest that inevitably arise, Middle Eastern states seem more adept at sharing resources and achieving economic gains for the benefit most member states. Financial reports from Middle Eastern media show growing economic stability and wealth for many states in the region. This surprising success led me to wonder what are the factors that may contribute to the success or failure of regional cooperation. One of the key differences between the EU and the regional organizations of the Middle East is the unity of religious beliefs and values. Although many member states in the EU can be categorized as Christian, it would be difficult to claim that any EU state shares an affinity with another. Cultural, regional, and historical differences seem to exacerbate the divide between each EU member state and increase the feeling that everyone is in it for themselves, so to speak. There does not seem to be any common goal or any real “cooperation” within the region. This mutual indifference is less present in the Middle East because of the strong bond of a Muslim majority who share, despite occasional political differences, common values and often also a common historical struggle. These Middle Eastern states are bound by their faith and, it can be argued, a common enemy, and therefore a common goal. The recent EU bailout policies that have put a stranglehold on the sovereignty of countries such as Cyprus will surely instill resentment towards the stronger member states, further destabilizing the region. Meanwhile, the Middle East is doing just fine.

Latin America – (week 13 -April 11)

 

LatAm’s major defense fair opens in Brazil with 700 companies from 48 countries – major development towards international defense cooperation.

Delegations from 48 countries some of them including Defense ministers attended the  International Defence and Security Fair, (LAAD), in Rio de Janeiro the largest show of military equipment in Latin America. The almost 30.000 visitors expected at the Riocentro convention center for the ninth edition of LAAD, among which 300 official delegates will be able to appreciate the latest products and systems at the stands representing 700 companies from 48 countries among which such giants as Boeing, Saab, Embraer, Rosoboronexport, according to the organizers. The number of stands in the four-day show is greater than in 2011 (663), following on decisions from countries such as Canada, Chile, Arab Emirates, Colombia, Slovakia and Norway to put up their own pavilions with their home representatives. The fair will be opened by Defence minister Celso Amorim who will also be holding meetings with his peers from Argentina, Ukraine, South Africa and Slovakia as well as the British Defence minister Andrew Murrison and Pedro Argüelles Spain’s Secretary of State for Defence. Amorim is to take advantage of the LAAD ninth edition to have UNASUR members (Union of South American Nations) sign the Consulting Committee Project Statute with the intention of jointly developing and building a training fighter plane. LAAD which this year covers a show area of 60.000 sq metres brings together every two years Brazilian and international corporations specialized in equipment, services and technologies for Armed Forces and law enforcement corps.

Such exhibition is a big step towards Unasur’s exposure to the most powerful defense players in the World. International relations scholars generally view events such as this in terms of state power, indicating both economic and military power. Those states that have significant amounts of power within the international system usually like to display it with the intent to demonstrate their capabilities (which is usually presented in a way of such exhibition fairs or other military training that is often publicly advertised), and another purpose is to attract alliances.

It is known that neofunctionalism model of regional integration often causes the spill over effect into other areas of cooperation, in such a way that entities other than states can also acquire and wield power  and promote cooperation in international relations. Such entities can include multilateral international organizations, multinational corporations, such as above mentioned companies (Boieng, Embraer) which have a huge stake in state’s military and defence position. Such is usually done to create a regional hegemon with super power, in this case military, and assuming that this is the intent behind holding this exhibition in Brazil. However, it is likely that following the event, Brazil will become the most powerful defense player in the LatAm region and will represent other LatAm countrie in the field of defense.  After hosting such event, Brazil will be put in advantageous position with a multitude of most powerful international players. Even though the “realist” view would dispute this position, attempting to stay away from the creation of powerful blocs that can create a hegemon within the region, from the previous events and actions on behalf of Brazil (election, not accepting Paruguay, discussing trade agreements with the EU to name a few) the intent of reasserting its power on behalf of Braziland infront of other UNASUR  members is obvious, and this military-defense exhibition is another proof.

http://en.mercopress.com/2013/04/09/latam-s-major-defence-fair-opens-in-brazil-with-700-companies-from-48-countries

Asia (Week of April 8th)

ASEAN Exchanges Embark on Next Phase of Tour

The Philippine Daily Inquirer reports that the next phase of the ASEAN Exchanges’ promotional tour is underway.  Titled “Invest ASEAN 2013”, the tour is intended to spur intra-regional trade among the groups seven exchanges.  The next focus of the tour is Vietnam, specifically the Hanoi Stock Exchange (HNX), following an enthusiastic meeting on April 1st at the Hochiminh Stock Exchange (HOSE) that prompted the ASEAN Exchanges to extend a fourth a leg of the tour.  HOSE Chair Tran Dac Sinh gloated that “we are encouraged by the success of Invest ASEAN 2013, signifying a strong interest among investors to trade cross-border in ASEAN”, sentiments echoed by the ASEAN Exchanges during the early stages of the tour in Thailand, Malaysia, and Singapore – the first to link their exchanges through the ASEAN Trading Link.  In addition to the Philippines and Indonesia, the five countries comprise the founding members of ASEAN and have the most advanced economies of the group.  While the tour is advertised as contributing to the goal of building an integrated ASEAN Economic Community by 2015, critics highlight the absence of representation from Laos, Cambodia, Brunei, and Myanmar from the ASEAN Exchanges.

http://business.inquirer.net/115681/asean-bourses-set-new-road-show

Energy Crisis Looms in Asia

A new report from the Asian Development Bank (ADB) warns of Asia’s increasingly unsustainable path of energy consumption, that if left unchanged, may lead to massive environmental problems and social inequities.  ADB Chief Economist Changyong Rhee stated that “Asia could be consuming more than half the world’s energy supply by 2035,” adding that Asia must do more to contain rising demand and explore cleaner energy options.  Rhee continued to argue the need for policymakers to address politically difficult issues pertaining to fuel subsidies and regional energy market integration.

The timing of the report is significant, as it coincides with a warning issued this week by the World Health Organization about the increasing health problems related to India’s rising carbon emissions.  Evidently, Asia must aggressively pursue renewable energy technologies if the grim projections of the two organizations are to be thwarted.  While admitting that countries will be unable to meet all their power requirements individually, the ADB promotes accelerated cross-border interconnection of power and gas grids to improve efficiency, cut costs, and take advantage of surplus power.  On an optimistic note, the ADB concluded by stating, “with increased cooperation, a pan-Asia energy market is achievable by 2030.”

http://articles.timesofindia.indiatimes.com/2013-04-09/pollution/38402504_1_air-pollution-diesel-engine-exhaust-maria-neira

http://www.adb.org/news/asias-future-prosperity-requires-major-change-energy-use

European Union: Week of April 8, 2013

EC warns Spain and Slovenia to Fix Their Debt Problems

The European Commission has officially given out warnings to Spain and Slovenia  for lack of dealing with the imbalances in their economies promptly enough. Spain’s banking system has been bailed out, while it is expected that Slovenia will be the next nation to ask for a debt rescue. Of the 13 European Union countries under review at the present time, the Commission has stated that Spain and Slovenia are in the worst state. Spain must deliver a reform programme by the end of April, and Slovenia has been required to creation some form of urgent policy action. The imbalances in debt, unemployment and growth are becoming dangerous for the long-term future of both countries. The other 11 European Union countries in macroeconomic imbalances include Belgium, Bulgaria, Denmark, France, Italy, Hungary, Malta, the Netherlands, Finland, Sweden, and the UK.

BBC News – Brussels warns on Spanish and Slovenian ‘imbalances’

 

 

The Eradication of Tax Evasion in France

French President Francois Hollande is calling for a total eradication of the world’s tax havens. He has also required French banks to declare all of their subsidiaries. He stated, “I won’t hesitate to consider as a tax haven any country that refuses to cooperate fully with France.” French banks will no longer be able to hide transactions carried out in a tax haven country, and a new national prosecutor would judge over cases of fraud and corruption. Furthermore, a list of banned professions for politicians will be drawn up in order to prevent conflicts of interest. The creation of a new “high-level authority…to monitor the assets and interests of ministers, members of parliament, [and] top elected officials” will, it is hoped, spread across the region, in an effort to fight tax evasion. French Finance Minister Pierre Moscovici also wrote to the European Commission to aid them in increasing the exchange of banking information across Europe, so as to further decrease tax evasion. Luxembourg has said that it will implement rules on the automatic exchange of bank account information with its EU partners beginning in 2015. The hope is to have all EU member states do the same, to crackdown on bank secrecy, and allowing for greater transparency.

BBC News – France’s President Hollande: Eradicate tax havens

BBC News – Luxembourg to ease the secrecy surrounding its banks

North American Regionalism: A Progress Report?

With its superpower hegemon, its combination of two “northern” Anglo Saxon states with a “southern” Hispanic counterpart, and its limited regional institution, the North American regional project stands as something of an oddity.

While the North American continent is geographically united, the concept of a North American region as an economic and political space that includes Canada, the United States and Mexico is fairly new. It may be suggested that it was only with the signing of the North Atlantic Free Trade Agreement (NAFTA) in 1992, which expanded the preexisting bilateralism into a trilateral trade bloc, that North American regional cooperation was formally inaugurated.

NAFTA stands as a contested project. It has elicited both praise as a deemed source of growth, trade benefits and economic efficiency and criticism for its impact on domestic industries and job markets.

While there have been calls for an expansion of the integration efforts spearheaded by NAFTA, no such advances have been made. Emblematically, the manner that the Security and Prosperity Partnership (SPP) initiative that was launched in 2005 simply disappeared speaks to a persistent reluctance to expand regional efforts beyond their present economic framework.

In drawing on Ann Capling and Kim Richard Nossal it may thus be suggested that North American regionalism is contradictory. On the one hand, NAFTA has clearly fostered the intensification of what has been termed “regionalization” – the process of economic integration that is driven from the bottom up by private actors such as firms. On the other hand, NAFTA has not led to greater “regionalism” meaning the state-led efforts to deepen regional integration through the fostering of other formal mechanisms to support institutionalized cooperation and collective action.

It may be suggested that the unwillingness on the part of the United States to delegate its sovereignty, with regard to both foreign relations and its domestic economic policies stands as a significant stumbling block to a deepening of North American regional cooperation. Notwithstanding, there has been a recent move towards acknowledging NAFTA as a potential source to solving pressing internal issues, such as those posed by  illegal immigrants.

In recent months, an extroverted orientation has been educed by North American states, whereby all three NAFTA members have joined in negotiations for the proposed Trans-Pacific Partnership and have sought to establish trade agreements with the European Union.

To date, North American regional cooperation is largely confined to trade. While NAFTA has been institutionalized, it has not ‘progressed’ into deeper cooperative arrangements in other policy domains. It may be suggested, moreover, that despite elite-driven efforts to deepen NAFTA, a North American regional community has not yet emerged. Given this lack of a regional ‘community’ or ‘identity’, it remains unlikely that North American regional cooperation will greatly exceed its present status.