Regional Integration in the European Union (EU), Essay Example

The Supporting Argument

The creation of a single market economy in Europe, under the auspices of the European Union (EU) has had many significant advantages.  The ability to move capital, goods, services and people  within the European countries, without constraint or barriers.  Progress has been remarkable since the EU was formed despite many cultural and political differences between member states.  The adoption of a common regulatory framework  has allowed investors to develop broad European wide strategies for economies of scale and operational improvement of trade and financial flows.

The emergence of the new EU currency ‘ the euro’  has provided an important alternative in the bond market “The euro has rapidly become an attractive alternative to the dollar for international bond issuance, especially in the corporate sector, where euro denominated issuance increased more than three-fold in 1999 compared to 1998”  (Verbeken, 2009).  Regional integration greatly improved policy co-ordination over member states.  In particular the convergence on adoption of macro-economic policies that created structural reforms in the market for goods.  Integrated policy procedures have continued to be developed with particular success on monetary reforms. Other areas like employment and structural coordination have proved more difficulty because of the need for consensus building.

Europe is generally in favour of regional integration, particularly where it can achieve its’ objectives in international and multi-national agreements.  Essentially the EU will focus upon two main conditions in order to fulfil its objectives in this area.

1. The need for proximity to extend beyond the base geographical definition to include economic, regulatory and cultural ;
2. Widen the horizon of elimination of tariff barriers to include regulatory co-operation, non tariff barriers, capital movements and freedom of services.

The EU has continued to both support and push forward regional integration initiatives. Perhaps none more important than the plight of Africa.  A number of these countries have been brought under a single umbrella but progress has proved difficult in certain areas, not the least of which is Zimbabwe where the EC has sanctions imposed because of human rights issues with Robert Mugabe and his regime.  ” From December to March, 14.4 million people in Zimbabwe, Zambia, Malawi, Mozambique, Lesotho and Swaziland face the threat of starvation. In every country, HIV/AIDS has played a major role in exacerbating the crisis.

Fifteen European nations participated in the meeting, which was originally scheduled to take place in Copenhagen, Denmark on Nov 5. The EU informed SADC that the Zimbabwe Foreign Minister, Stan Mudenge would not be able to attend as he is banned from travelling to Europe as a result of the sanctions imposed on the Zimbabwean regime by the European Union this year. In response, SADC leaders threatened, en masse, to boycott the meeting. A compromise was eventually reached and it was agreed to host the meeting in Maputo.

In a statement, Zimbabwe’s main opposition party, the Movement for Democratic Change (MDC), urged the EU-SADC meeting to put Zimbabwe near the top of the agenda.”  (Mucanse, 2002)

Europe will seek to strengthen regional integration particularly those with major trading ties. A good example being the USSR that provides natural gas for Europe and energy for heating. Europe has a major reliance with the USSR here and it is important to strengthen economic ties and relationships in this area. Unfortunately former satellite countries like the Ukraine and Georgia have not made this process easier, particularly where gas pipelines have flowed across their country to Europe.  Regional conflicts have resulted in Europe being impacted when Russia cut the flow of gas where the Ukraine was accused of not paying its bills to Russia.

The Counter Argument

Historically the EU has been slow to develop and suffered considerable periods of stagnation over key policy areas.  For example, when integration proceeds in one sector it is normally stopped by other external special interest groups who persuade their governments to protect adjacent issues.  This is essence creates a “stop” phase whilst the respective governments argue and debate the policy issues.  This often creates new conflicting policies and rivalry amongst the member states. These often become self defeating exercises, examination of the costs then moves them towards more integration creating a new “go” phase.

Paul R Krukman (1992) indicated that we are at the beginning of experiencing the decline of the global economy.  As trade blocs like Europe continue to expand and the economy continues to evolve into competing regional trade blocs, the devolution into competing regional blocs will become even more restrictive from outside.  Appropriate parallels are being drawn to the 1930’s where trade was restricted and contained within predefined borders. This pushing the world into the depths of depression.  The arrival of the euro as a currency has given rise to increasing competition concerns in North America.  The Canadian viewpoint is that the USA and Canada should establish a similar single currency supporting and enhancing the existing NAFTA agreement ” In the North American context, Courchene and Harris (1999) propose that Canada consider establishing a monetary union with the United States. Monetary union, they argue, would reduce transaction costs, that is how much it costs to make a certain trade in terms of time. These costs are incurred because of border-related paperwork and the use of two currencies that fluctuate in value against each other. A monetary union would relieve companies of these costs, reduce the paperwork and offer a more stable macro-economic environment allowing for more accurate calculation of profit margins. For Courchene and Harris, monetary union is justified by enhanced North American trade integration”  (Cobbett, 2009)

Europe has tried to influence regionalization in the Middle East with particular reference to the Energy Industry.  Potential admittance of Turkey, as suggested in 2014, would be seen as a means of consolidating this foothold from a number of different perspectives.  Having a member country that is Islamic and influential with other Middle Eastern Countries, the ability to extend European military might into the region beyond purely NATO concepts.  Counter arguments are that other countries like Russia may see this as a threat in particular with the potential of new naval bases supporting both the Mediterranean and Black Sea.  This at a time when it already has worrying relationships with the Ukraine ( also wanting to move closer to Europe), further depriving Russia of the only Military Port ( Sevastopol) for its Navy.  Strategically limiting Russia only to ports of Vladivostok and Murmansk.  This could further deteriorate Europe and Russia relationships, despite the fact that Russia and the EU are major trading partners. Hence regionalization can be an extremely dangerous game of political manoeuvring for purely economic self-interest. Similar concerns surround concepts of regionalization with the EU in Africa and Asia.

Works Cited

Cobbett, E. (2009, 2 1). Deeper North American Integration? Retrieved 11 17, 2007, from Foreign Affairs & International Trade Canada: http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/cobbett.aspx?lang=en

Mucanse, L. (2002, 11 7). EU Promotes Regional Integration . Retrieved 11 17, 2009, from IPS: http://www.aegis.com/news/ips/2002/IP021109.html

Verbeken, D. (2009). Study on Regional Economic integration in Asia and. Retrieved 11 17, 2007, from European Commission: http://www.mof.go.jp/jouhou/kokkin/tyousa/tyou059.pdf