In this study it is intended to investigate today´s actual economic interdependence of what we would call the Middle East and North African (MENA) region and to analyze its economic interweaving, both among its member countries and into the global trading system.
Being aware of the complexity and breadth of this topic, the author has chosen only three subset economic integration agreements, both between the countries of the MENA region (intraregional) – also comprising a subregional agreement – and between the MENA region and other regions (interregional), for closer analysis.
Concerning the efforts made towards interregional economic integration, this thesis concentrates mainly on the so-called EU-MED Partnership which was initiated at the Barcelona Conference in 1995 and aims to establish an EU-Med Free Trade Area (EMFTA) by the year 2010 including the EU and the 12 so-called Mediterranean countries
which, apart from Malta, Cyprus and Turkey, all belong to the MENA region.
In contrast, on the intraregional level, the latest initiative in 1997 will be examined, where 17 out of 22 Arab League member states - all of which also belong to the MENA region apart from Sudan – joined to constitute a “Greater Arab Free Trade Area” (GAFTA, mainly to get rid of traditional trade barriers for goods.
On the smaller subregional level, the Gulf Cooperation Council (GCC), consisting of 6 Gulf countries, which plans the establishment of a common currency by 2010, will be examined more closely.
With GAFTA, GCC and the EU-MED Partnership all being in a different depth of integration and each representing one of the three different levels of integration (subregional, intraregional, interregional), the author holds the view that this choice reflects the actual state of integration in the region best.
In a nutshell, this study tests the compatibility and correlation of the two different integration trends – multilateral and regional – using the example of the MENA region. Are they supplements or substitutes? Does regional integration inhibit or facilitate multilateral integration or vice versa? Are the above-mentioned regional integration arrangements contradictory, compatible or even mutually dependent?
By approaching these questions the reader is to gain some insight into the so-called “Spaghetti Bowl” of cross-cutting integration agreements in the region.
Table of Contents
INTRODUCTION
I. TRADE AND WELFARE
II. REGIONAL ECONOMIC INTEGRATION
a) Regional Economic Integration from a Historical Perspective
1. Old Regionalism
2. New Regionalism
b) Stages of Regional Economic Integration
c) Economic Causes and Effects of Regional Economic Integration
1. Static Effects of Regional Economic Integration
i. Trade Creation & Trade Diversion Effects
ii. Demand Side Effects
iii. Terms of Trade Effects
2. Dynamic Effects of Regional Economic Integration
i. Increased Competition
ii. Scale Effects
iii. Increased Efficiency
iv. FDI
v. Convergence/Divergence
vi. Agglomeration and Flow of Knowledge
d) Political Causes of Regional Economic Integration
i. Lobbies
ii. Domino Theory
iii. Bargaining Power
iv. Signalling, Credibility and Reputation
v. Security
e) Overlapping Regional Integration Agreements (RIAs) and the “Spaghetti Bowl” Problem
III. MULTILATERALISM AND THE WORLD TRADE ORGANIZATION (WTO)
a) The Emergence of the WTO
b) The Nature of the WTO
c) Principles of the WTO
1. The Most-Favoured Nation Treatment
2. The International Treatment Obligation
3. The Principle of Reciprocity
d) Structure of the WTO
e) Achievements and Omissions of the WTO
IV. MULTILATERALISM VERSUS REGIONALISM?
a) Regional Integration Agreements (RIA) and the WTO
1. GATT Article XXIV
2. Enabling Clause
3. GATS Article V
4. WTO Transparency Mechanisms for RIAs
b) Regional Integration Agreements as “Building Blocs” or “Stumbling Blocs”?
1. RIAs as “Stumbling Blocs”
2. RIAs as “Building Blocs”
c) RIAs and Trade in Services
d) The Potential of “South-South” Integration Agreements
V. THE MENA REGION
a) The MENA -Countries – One Region?
b) MENA ´s Economic Integration on a Regional and on a Global Level
c) The Arab League (AL) – The Forerunner of Arab Economic Integration
d) Regional Integration Agreements (RIA) in the MENA Region
1. The Gulf Cooperation Council (GCC) – Subregional
i. The Agreement
ii. Trade in Services
iii. Intellectual Property Rights (IPR) and Harmonization of Standards
iv. GCC and International Law
v. Supervision
vi. Rules of Origin
vii. Dispute Settlement
viii. Beyond the Border Measures
ix. Customs
2. The Greater Arab Free Trade Area (GAFTA) – Intraregional
i. The Agreement
ii. Trade in Services
iii. Intellectual Property Rights (IPR) and Harmonization of Standards
iv. GAFTA and International Law
v. Supervision
vi. Rules of Origin
vii. Dispute Settlement
viii. Beyond the Border Measures
ix. Customs
3. The EU – Mediterranean Partnership (EMP) – Interregional
i. The Agreement
ii. Trade in Services
iii. Intellectual Property Rights (IPR) and Harmonization of Standards
iv. EMP and International Law
v. Supervision
vi. Rules of Origin
vii. Dispute Settlement
viii. Beyond the Border Measures
ix. Customs
4. Further RIAs in the Region
VI. PROBLEMS WITH OVERLAPPING RIAS IN THE MENA REGION
CONCLUSION
Objectives & Core Themes
This thesis examines the economic interweaving of the Middle East and North African (MENA) region both among its member states and within the global trading system, specifically investigating the compatibility and correlation between multilateral and regional integration trends.
- The theoretical foundations of economic integration, including trade welfare and comparative advantage.
- Economic and political drivers of Regional Integration Agreements (RIAs).
- The structural relationship between regionalism and the global multilateral framework of the World Trade Organization (WTO).
- Detailed case studies of key regional initiatives, specifically the GCC, GAFTA, and the EU-Mediterranean Partnership.
- The challenges arising from overlapping integration agreements and their impact on regional trade efficiency.
Excerpt from the Book
I. TRADE AND WELFARE
If one refers to history, countries have always been involved in trade. But why do they do that? Apparently because they benefit from doing so. Countries trade with each other basically for two reasons. First of all, countries are different in their endowment of resources and their factors of production. This means that some goods are simply not existent in one country or they cannot be produced because one or more factors of production are missing. In that case they have to be imported. Yet even if a certain good is available in a country or it could be produced, it may still be beneficial to import it for reasons of economy.
Secondly, through trade, countries can achieve economies of scale in production. If each country focuses only on the production of certain goods – because it imports the rest from its trading partner – it has to produce a larger amount of the respective good, for its home requirements and for export. Consequently, the specialization and the higher volume in production allow for more efficiency.
It is generally accepted that it was the above-mentioned Adam Smith with his Magnum Opus “The Wealth of Nations” who laid the foundations for the theoretical understanding of trade and the mutual benefits for its participants, the so-called school of classical economic thought.
According to his theory, the concept of the international “division of labour” is accompanied by a more efficient factor, 'input', and therefore an increase in economic welfare for each country involved. Smith argued that each country should only produce those goods in which it had absolute cost advantages, which means that every country should specialize in producing only the good it can produce cheapest.
Summary of Chapters
I. TRADE AND WELFARE: Discusses the classical economic theories of trade, specifically absolute and comparative advantages, to explain why nations engage in international commerce.
II. REGIONAL ECONOMIC INTEGRATION: Provides a theoretical framework for regionalism, detailing the static and dynamic economic effects and the political motivations behind forming regional agreements.
III. MULTILATERALISM AND THE WORLD TRADE ORGANIZATION (WTO): Outlines the origins, principles, and institutional structure of the WTO as the primary global body for managing trade liberalization.
IV. MULTILATERALISM VERSUS REGIONALISM?: Analyzes the debate on whether Regional Integration Agreements serve as building or stumbling blocks for the global trading system, considering WTO transparency mechanisms.
V. THE MENA REGION: Profiles the economic landscape of the MENA region, evaluating existing agreements like the GCC, GAFTA, and the EU-Mediterranean Partnership in terms of integration progress.
VI. PROBLEMS WITH OVERLAPPING RIAS IN THE MENA REGION: Examines the complexities and potential inefficiencies caused by overlapping memberships and inconsistent regulatory frameworks within the region.
Keywords
Regional Integration Agreements, Multilateralism, MENA, GCC, GAFTA, EU-Mediterranean Partnership, Trade Diversion, Trade Creation, WTO, Economic Integration, Foreign Direct Investment, Rules of Origin, Spaghetti Bowl, Comparative Advantage, Trade Policy.
Frequently Asked Questions
What is the core focus of this research?
The work investigates the economic interweaving of the MENA region and assesses how regional integration efforts interact with the multilateral trading system managed by the WTO.
Which specific integration agreements are analyzed?
The study centers on three distinct levels of integration: the Gulf Cooperation Council (subregional), the Greater Arab Free Trade Area (intraregional), and the EU-Mediterranean Partnership (interregional).
What is the primary research question?
The thesis asks whether regional and multilateral integration are supplements or substitutes, and whether the regional integration arrangements in the MENA region are contradictory, compatible, or mutually dependent.
What methodology is used to evaluate integration?
The analysis utilizes classical and modern economic integration theory, comparing static and dynamic effects, and examines the political economy of integration, including the roles of lobbies and bargaining power.
How is the impact of overlapping agreements addressed?
The research explores the “Spaghetti Bowl” problem, analyzing how conflicting Rules of Origin and inconsistent trade standards within overlapping RIAs can create administrative burdens and obstruct trade.
What key findings define the current state of MENA integration?
The study concludes that while regional integration in the MENA region is historically weak due to structural and political factors, it can complement globalization if agreements are coordinated consistently to build credibility.
Why are Rules of Origin a critical issue for the MENA region?
Different RIAs apply varying Rules of Origin, which forces businesses to navigate a confusing network of regulations, often hindering market access and increasing administrative costs for exporters.
What is the significance of the “training ground argument” in this context?
It posits that regional agreements can serve as testing platforms for liberalization before these measures are implemented on a broader, global scale, though the author questions the extent of this effect in practice.
- Citation du texte
- Benjamin Hätinger (Auteur), 2009, Multilateral vs. Regional Economic Integration? - The Middle East and North African Region, Munich, GRIN Verlag, https://www.grin.com/document/155911
