Regionalisation of World Politics

Regional organisations succeed to the degree that their members are willing to be bound. The European Union went furthest because its founding purpose was to make war between its members structurally impossible; every other grouping was built for lesser reasons and has achieved correspondingly less.

This is chapter 44 of the PSIR Optional Notes, from the part on International Relations in the Paper II syllabus. The complete book is a free download.

Concepts

Regionalism refers to the conscious policy of states to coordinate through formal institutions; regionalisation refers to the growth of trade, investment, migration and social interaction within a region regardless of policy. East Asia is the standard example of high regionalisation with weak regionalism; Africa the reverse.

Balassa‘s ladder gives the standard measure of depth: a free trade area removes internal tariffs; a customs union adds a common external tariff; a common market adds free movement of factors; an economic union adds harmonised policy and often a common currency; and political union adds common government.

Open regionalism, the APEC formulation, means preferences extended on a most-favoured-nation basis so that regional liberalisation is not discriminatory. The alternative concern, from Bhagwati, is that preferential agreements are stumbling blocks rather than building blocks toward multilateral liberalisation, creating a spaghetti bowl of overlapping rules of origin.

The European Union

Trajectory

Schuman Declaration 1950 and the European Coal and Steel Community 1951, whose purpose Schuman stated explicitly: to make war between France and Germany not merely unthinkable but materially impossible. Treaty of Rome 1957 created the EEC and Euratom; the Single European Act 1986 set the 1992 single-market programme and extended qualified majority voting; Maastricht 1992 created the European Union with its three pillars, and provided for economic and monetary union; Amsterdam 1997 and Nice 2001 prepared for enlargement; the Constitutional Treaty was rejected by French and Dutch referendums in 2005; Lisbon 2007, in force 2009, absorbed most of its substance, gave the Union legal personality, created the permanent presidency of the European Council and the High Representative, and made the Charter of Fundamental Rights binding. The euro entered circulation in 2002; enlargement to Eastern Europe came in 2004 and 2007; the United Kingdom left in 2020.

Why it went furthest

• Supranational law. Van Gend en Loos (1963) established direct effect, so individuals may invoke European law in national courts; Costa v. ENEL (1964) established primacy over national law. A legal order binding on members without re-enactment is what distinguishes the EU from every other regional body.
• Institutions with autonomy. A Commission with the sole right of legislative initiative; a directly elected Parliament with co-decision powers; a Court whose rulings bind; and qualified majority voting, which removes the unanimity veto in most areas.
• Purpose. It was built to end intra-European war, which supplied the political willingness to accept constraint that no trade rationale alone generates.

The 2024 paper asked whether the EU is the most successful experiment in regional integration. The case for is the above, plus the single market, the euro, Schengen, structural funds that transferred resources to poorer members, and enlargement used as a democratising instrument. The case against: the eurozone crisis exposed a monetary union without fiscal union and imposed severe adjustment on the periphery; the migration crisis of 2015 revealed the absence of a common asylum policy; the democratic deficit, the distance between citizens and Brussels decision-making, remains unresolved; rule-of-law disputes with member states have tested enforcement; and Brexit demonstrated that integration is reversible.

The balanced verdict: unquestionably the deepest and most institutionalised, and therefore the most successful by any measure of integration; but its depth is what makes its crises severe, and its model has proved difficult to export, since ASEAN, SAARC and Mercosur have all declined to follow it.

ASEAN

Founded by the Bangkok Declaration of 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand, in the context of regional communist insurgency and of Konfrontasi between Indonesia and Malaysia. It expanded to ten members with Brunei (1984), Vietnam (1995), Laos and Myanmar (1997) and Cambodia (1999), with Timor-Leste admitted in principle.

The ASEAN Way: decision by musyawarah and muafakat, consultation and consensus; strict non-interference in members’ internal affairs; informality and the avoidance of legalistic instruments; incrementalism; and the preference for face-saving over confrontation.

Achievements. No war between members since 1967; the Treaty of Amity and Cooperation (1976) as a code of conduct that external powers including India, China and the United States have acceded to; the ASEAN Free Trade Area from 1992; the ASEAN Charter (2007) giving legal personality; the three-community structure of political-security, economic and socio-cultural pillars agreed for 2015; and, most consequentially, ASEAN centrality, the convening role that made ASEAN the hub of the wider architecture, the ASEAN Regional Forum (1994), ASEAN Plus Three (1997), the East Asia Summit (2005) and the ADMM-Plus (2010), and the driver of the Regional Comprehensive Economic Partnership signed in 2020.

Limits. Non-interference prevents action on internal crises, most visibly Myanmar since 2021, where the Five-Point Consensus has not been implemented; consensus gives each member a veto, which China has used through individual members to block South China Sea language, as at Phnom Penh in 2012 when no communiqué was issued; economic integration is shallower than the tariff numbers suggest because non-tariff barriers persist; and the development gap between the original members and the newer entrants is wide.

The 2025 paper asked about ASEAN Plus Three, the grouping with China, Japan and South Korea created after the 1997 Asian financial crisis. Its principal achievement is financial: the Chiang Mai Initiative of 2000, multilateralised in 2010 into a currency-swap arrangement, and the ASEAN+3 Macroeconomic Research Office; alongside the Emergency Rice Reserve and cooperation on public health. Its limits: the swap arrangement remains linked to IMF programmes beyond a threshold and has never been drawn upon; and Sino-Japanese rivalry constrains what the three can agree.

APEC and NAFTA/USMCA

APEC

Founded 1989, twenty-one member economies, a term chosen so that Taiwan and Hong Kong could participate alongside China. Its method is consultative and voluntary: the Bogor Goals of 1994 set free and open trade and investment by 2010 for industrialised and 2020 for developing members, pursued through concerted unilateral liberalisation and individual action plans rather than binding commitments. The goals were not met on schedule and were succeeded by the Putrajaya Vision 2040. Its value has been as a forum for standard-setting, trade facilitation and leaders’ dialogue rather than as an instrument of liberalisation. India is not a member, having sought entry since 1991.

NAFTA to USMCA

The 2024 paper asked for NAFTA’s limitations and how the USMCA addressed them.

NAFTA, in force 1 January 1994 among Canada, Mexico and the United States, created a free trade area, not a customs union, with rules of origin to prevent transshipment, investor-state dispute settlement under Chapter 11, and side agreements on labour and environment that were widely regarded as weak.

Its limitations. Labour and environmental provisions sat outside the core agreement and were poorly enforced, so wage convergence did not occur and the agreement was blamed for manufacturing job losses in the United States. Rules of origin at sixty-two and a half per cent for autos permitted substantial non-regional content. Chapter 11 allowed investors to sue states over regulation, which attracted criticism from all three countries. Mexican agriculture, particularly maize, was exposed to subsidised American production. There was no mechanism for periodic review, and no provision covering digital trade, which did not exist in 1994.

How the USMCA responded, in force 1 July 2020: automotive rules of origin raised to seventy-five per cent regional value content, with a labour value content requirement that a share of vehicle content be made by workers earning at least sixteen dollars an hour; a Rapid Response Labour Mechanism permitting facility-specific enforcement, which has been used repeatedly in Mexico; a digital trade chapter prohibiting data-localisation requirements and customs duties on electronic transmissions; investor-state dispute settlement eliminated between the United States and Canada and narrowed with Mexico; and a sunset clause terminating the agreement after sixteen years unless renewed, with joint review every six.

The assessment: the USMCA is a managed-trade agreement rather than a liberalising one, and its labour provisions are the most enforceable in any trade agreement, which is why it is read as a template for a protectionist turn rather than a deepening of integration.

Other groupings and the Indian interest

Briefly, since Chapter 57 covers South Asia: Mercosur (1991) as a customs union weakened by Argentine-Brazilian macroeconomic divergence; the African Union (2002) and the African Continental Free Trade Area (2021), the largest by membership; the Gulf Cooperation Council (1981); the Shanghai Cooperation Organisation (2001), which India joined in 2017; BIMSTEC (1997) as India’s preferred bay-of-Bengal vehicle; the Indian Ocean Rim Association (1997); and RCEP (2020), which India declined to join in 2019 over the trade deficit with China, inadequate safeguards and the absence of movement on services.

Read the rest. This chapter is one of 58 in the complete PSIR Optional Notes, covering Paper I and Paper II in full — free to download.

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