Term Paper: Globalization Regional Integration Efforts Were Created

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Regional integration efforts were created in order to remove economic barriers between nearby countries and prevent conflicts. It involves the trade of good without tariffs and quotas; free movement of services, labor, and capital; removal of trade policies that provide advantage of local businesses; and better property rights. After World War II, there has been a dramatic rise in the number of Regional Trading Agreements (RTA) submitted to the GATT (124 RTAs during 1948-1994) and more after the World Trade Organization (WTO) was created (265 RTAs) (Pengiran, 2003). The main motivation for the countries involved was to improve the economy by expanding the markets from local to regional/global. Wealthy countries almost always did the initiative, but less-developed countries also benefit from the integration. East Asia regionalization efforts followed suit, most especially after the economic crisis during 1997. The financial crises and depression became a wake up call to avoid similar incidents in the future. The organizations described below will include the major regional integration efforts, their histories, and advantages/disadvantages of each one.

II. History and Analysis

Regional Integration first started in Europe through the Maastricht Treaty on November 1993. This created the European Union (EU) whose aim was to prevent another war after World War II by joining the countries in economic and political cooperation. Right now, it has 25 member countries making use of a single constitution and a single currency system called the Euro. The EU is the largest and most powerful regional integration effort right now. It evolved from simple economic cooperation into a federation system. At the same time, it was able to maintain each member's sovereignty and national interest. As of 2004, it had the largest economy in the world having a GDP of 12,481,824 million dollars with significant trade surplus ("European Union" n.d.). The main advantages of the EU are: (1) a huge market of 400 million people where member economies can enter without restrictions; (2) freedom of EU citizens to move freely and get jobs within the member countries; and (3) a diverse choice of low-cost goods and services brought about by competition. The disadvantages, however are: (1) the EU has great power that it can dictate the policies and politics of an individual country; (2) the EU is undemocratic, and decisions are made by a single council; (3) too many rules and regulations that promote bureaucracy and unnecessary overhead ("International Organisations - the European Union" n.d).

The North American Free Trade Agreement (NAFTA) was created on January 1994 to enable free trade agreements between United States, Canada, and Mexico. It eliminated tariffs and restrictions between the three countries. The main advantage is free trade and unrestricted exportation. It also helped Mexico's modernization that was made possible by U.S. assistance. Cheap labor was also made available, and jobs were created (40,000 jobs for every $1 billion in exports). Specialization was achieved by each member country, with U.S. In technology and Mexico for labor.

The disadvantages caused by NAFTA are the loss of jobs, environmental problems, lower safety and… [END OF PREVIEW]

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