Regional Economic Integration: Selected Issues (OSCE Paper) (original) (raw)

Summary (Key-issues) • The world economy is characterised by two tendencies: globalisation and regional integration. • The number of regional economic integration schemes has grown fast over the last ten years. • The scope of REI agreements is quite large, with different levels of depth and size. • The economic analysis of REI addresses many dimensions. Trade creation and trade diversion effects are widely used concepts when assessing the impact of REI / trade liberalisation schemes. They allow the assessment of welfare changes. • REI benefits and loses are not evenly distributed within (and between) countries, which may indicate a need for income compensation and redistribution policies. • Within the OSCE region, there are several REI experiences, notably among transition countries. • As the most advanced regional integration scheme, the EU has gained unique and far-reaching experience. • EU integration is supported by various institutions and specialised bodies that implement a wide range of common policies and actions. • The EU is both deepening and enlarging. • Deepening means widening the scope of existing policies and/or adopting new ones. • The EU went through 5 waves of enlargement. Considering its importance, the May 2004 enlargement is seen as the most challenging. • EU enlargements have impacts on third countries such as trade diversion and creation effects and more competition. • Following the historical 2004 EU enlargement, EU external relations envision new relationships with neighbouring countries, which can foster trade and economic relations. • Free trade agreements are more limited in scope than the EU. However, as indicated by NAFTA, they might have significant impacts on trade, growth and employment, particularly for developing countries (e.g. Mexico). • Following the termination of old structures, transition countries have promoted various regional integration scheme. • The CIS aims inter alea at improving trade and economic links among members. It has been followed by sub-regional initiatives such as the Belarus Russia Union, GUUAM, the CES, etc. It is too early to evaluate their impact. Nevertheless, mutual compatibility should be carefully assessed as countries belong to several schemes. • Regional integration agreements must be compatible with WTO rules. They also require measures to facilitate trade. Even in the absence of effective integration, WTO membership and trade facilitation should be priorities, taking into account the development needs of the countries.