The main integration groupings of the world

Regional integration in its development can be traced both in countries that initially follow the path of market management, and in developing countries and countries with administrative regulation of the economy. An example of a regional integration association of countries, which today has the most significant period of its existence, is the European Union (EU). As an organization in the development of which, in fact, all the main integration forms were represented, the EU is of unconditional interest for considering mechanisms for regional integration.

To gain a new understanding of the unity of their continent , Europeans needed to survive two world wars. In 1946, Winston Churchill, who headed the British government during the war years, declared: “Europe must turn into a kind of United States.”

The preparatory stage of Western European integration was the five-year period of 1945-1950 In 1948, the Organization for Economic Cooperation and Development, was created to regulate aid coming from the United States within the framework of the Marshall Plan, and later the Organization for Economic Cooperation and Development. In the same year, the Benelux Customs Union was established, which included Belgium, the Netherlands and Luxembourg. The Union became a kind of model that demonstrated possible forms of economic cooperation in the economic sphere. In 1949, the Council of Europe was founded.

Further development of the integration process was initiated by France, which proposed to transfer the leadership of coal mining and ferrous metallurgy of France and Germany to a supranational body. The plan for the creation of the European Coal and Steel Community was promulgated in 1950, it provided for the establishment of international control over key branches of the military industry through the conclusion of a treaty binding on its participants. Thus, a sharp build-up of weapons in order to prepare for war became impossible.

Aware of the importance of this plan, Italy and the Benelux countries expressed their desire to join it. So, the history of the European Union began in 1951, when the European Coal and Steel Community (ECSC) was created, which included France, Italy, Germany, the Netherlands, Belgium, Luxembourg. Six years later (March 25, 1957) in Rome, the same countries signed treaties establishing the European Economic Community (EEC) and the European Atomic Energy Community (Euratom). The Treaty of Rome (1957) laid the constitutional foundations of the European Union, becoming the foundation for the creation of a free trade zone of six countries. By the end of the 60s, a customs union was created: customs duties were abolished and quantitative restrictions in mutual trade were lifted, a single customs tariff was introduced in relation to third countries. A common foreign trade policy has begun to be implemented. On its own behalf, the EEC began to negotiate and conclude agreements on trade, economic, industrial, scientific and technical cooperation. For example, in the early 60s, a unified agricultural policy was formed, focused on creating preferential conditions for the activities of local farmers. The EEC countries have begun to pursue a joint regional policy aimed at accelerating the development of backward and depressed areas. The same stage includes the beginning of integration in the monetary and financial sphere: in 1972, the joint floating of the currencies of some EU member states was introduced within certain limits (“currency snake”).

Since March 1979, the European Monetary System began to operate, uniting the countries of the EEC and aimed at reducing currency fluctuations and interconnection of exchange rates of national currencies, maintaining currency stability and limiting the role of the US dollar in international settlements of the Community countries. A special monetary and accounting unit “ECU” has been established within the framework of this system. The ECU was designed to perform four main functions: to become a link in the exchange rate formation mechanism in the foreign exchange market; an indicator of fluctuations in the exchange rates of the EU countries relative to each other; a unit of payment for credit operations or interventions in the foreign exchange market, as well as a means of settling the country’s external debt.

In 1987, the Common European Act (EEA) adopted by the EEC member countries came into force. Tasks were set for the joint development of scientific and technological research. According to the EEA, by the end of 1992 the process of creating a single internal market was to be completed, i.e. all obstacles to the free movement of citizens of these states, goods, services and capital in the territory of these countries were removed.

In February 1992, the Treaty on European Union was signed in Maastricht, which, after a series of referendums on its ratification in the member states, entered into force on November 1, 1993. The agreement also provided for the gradual transformation of the EU into an economic, monetary and political union.

Thus, by the end of 1992, the construction of a single European internal market was completed. The transition to a single internal market made it possible in 1996 to create from 200 to 900 thousand new jobs in Western Europe, raise the level of average per capita incomes by 1.1 – 1.5%, reduce inflation by 1 – 1.5%, increase industrial exports by 20 – 30%, reduce the gap in domestic prices in different EU countries from 22.5% to 19.6%, attract 44% of all international capital exports to the EU (against 28% in 1992).

The integration of the EU differs from other integration unions not only by a clearly expressed stage of development (from a free trade zone through a customs union, a single internal market to an economic and monetary union), but also by the presence of unique supranational INSTITUTIONS of the EU. The progressive movement of EU integration is ensured by the work of a system of political, legal, administrative, judicial and financial institutions. This system is a synthesis of intergovernmental and supranational regulation.

The main governing bodies of the EU are the Council of Ministers of the EU, the EU Commission, the European Parliament, the European Court of Justice.

Of great importance for the development of the EU is the fact that a single legal space has been formed there, i.e. EU legal documents are an integral part of the national law of the member states and have precedence in the event of disagreements with national law. The EU Commission ensures that the national regulations adopted do not contradict EU law. The system of regulation and control within the EU is carried out on the basis of relevant statutes, treaties and agreements within the Union on a common customs and monetary policy, a single legislation within the Framework of the European Parliament and other principles of integration international cooperation.

Since 1993, the AGREEMENT between the EU and EFTA on the Single European Economic Area has been in force, which provides for the free movement of goods, services, labour and capital. Thus, the world’s largest common market was formed, uniting 19 European countries.

The most striking feature of the modern development of the European Union is the formation of a single monetary system based on the single monetary unit of the euro.

The following were established as “pass criteria” for participation in the euro area:

The state budget deficit is not more than 3% of GDP. Public debt is not more than 60% of GDP. Long-term interest rates on loans should not exceed 2 percentage points compared to the average level of this indicator for the three EU countries with the most stable prices. Inflation is no more than 1.5 percentage points above the average level of this indicator for the three EU countries with the most stable prices. The absence of exchange rate fluctuations of the national currency beyond the limits allowed by the European Monetary System for the last two years. Having passed a long historical path of economic cooperation, the countries of Western Europe have reached a new frontier. They have united in the highest form of joint economic cooperation – integrating their economies and market infrastructures into the European Union.

Today, the Share of the European Union accounts for about 20% of world GDP (including the share of 11 member countries of the monetary union – 15.5%), more than 40% of world trade. On the one hand, the European Union has entered a qualitatively new stage of development, expanding its functions. Following the decision to create a common currency (the euro), common tax policy issues have become increasingly important. The budget of the European Union has already reached about $ 100 billion. At the same time, the strengthening of the financial and economic role of the EU is increasingly reflected in the political sphere. The EU countries set as their task the implementation of a common foreign and defense policy. For the first time, a multinational military structure is being established under the auspices of the European Union. In fact, the EU acquires the features of not only an economic, but also a military-political alliance.

The coming years will see the largest enlargement of the EU in its history. The first group of new members will include 6 countries – Estonia, Poland, Czech Republic, Hungary, Slovenia and Cyprus. At the same time, it was announced that negotiations had begun with the second group of countries, which included Latvia, Lithuania, Slovakia, Romania, Bulgaria and Malta. The European Union, on the threshold of new membership, is once again faced with a dilemma: enlargement or deepening. These polar trends develop simultaneously, and each has its own explanation: enlargement reflects the process of world globalization, deepening determines the internal stability of the EU. Thus, both are inseparable elements of the European integration process.

The political, economic, as well as organizational aspects of the creation of an economic and monetary union are of undoubted interest to the Union State of Russia and Belarus, primarily from the point of view of the possibilities of using the experience gained in the European Union in solving emerging problems in the process of a phased transition to a single currency.

Since the mid-80s in the Asia-Pacific region (APR), there has been a significant intensification of domestic flows of goods, capital and financial assistance. As a result of these processes, in 1989 the Asia-Pacific Economic Community (APEC) was created, which includes the following countries: Canada, the USA, Mexico, New Zealand, Australia, Papua New Guinea, Brunei, Indonesia, Malaysia, Singapore, Thailand, the Philippines, South Korea, Taiwan, China, The Province of Hong Kong, Chile, Japan, Russia, Vietnam and Peru. APEC today is the fastest growing area in the world. It accounts for about 45% of the population, 55%  of global GDP, 42% of electricity consumption and over 55% of the world’s investment. In the list of 500 largest corporations in the world, APEC is represented by 342 companies (including 222 – the United States and 71 – Japan). At the beginning of the XXI century. the share of the Asia-Pacific region in the world economic system (even excluding the countries of North America) will increase even more. During the existence of APEC, the average customs tariffs of the community countries decreased from 15 to 9%. The share of American exports in this region rose to 70%, China – 74%, Japan – 71%. APEC sets the task of gradually creating a  free trade  and  investment zone. By 2010 – for  the developed countries of the region, by 2020 – for developing countries.

Russia was accepted as a member of the organization in 1997, and without participation in APEC, Russia would have been isolated from this most dynamic region of the world. Moreover, Russia’s control over Siberia could also be threatened. Currently, APEC countries account for 10% of Russian foreign trade, and excluding the United States and Canada , 5%.

North American Free Trade Association (NAFTA). The agreement between the United States and Canada on the establishment of the North American Free Trade Association was signed in 1988, and in 1992 Mexico joined it. Since 1994, it has officially entered into force. Today, NAFTA represents the largest regional free trade area, where 393 million people produce a total GNP worth 8.6 trillion. Usd.

If we analyze the essence of the main provisions of the Agreement and compare with the fundamental premises of the EU documents, the main thing is obvious that not only customs barriers are dismantled. Within the framework of NAFTA, tariff barriers are gradually eliminated, most other restrictions on exports and imports are removed (except for a certain range of goods – agricultural products, textiles and some others). Conditions are created for the free movement of not only goods, but also services, capital, and professionally trained labor. Approaches for providing national regimes for foreign direct investment have been worked out. The parties agreed on the necessary measures to protect intellectual property, harmonize technical standards, sanitary and phytosanitary norms. The document contains the obligations of the parties regarding the creation of a dispute resolution mechanism (anti-dumping, subsidies, etc.), which will inevitably accompany the initial period of the formation of the organization. It should be noted that the Agreement does not provide for the solution of problems related to the social sphere, such as unemployment, education, culture, etc. Unlike in Western Europe, North American integration has so far developed in the absence of supranational regulatory institutions.

The participation of each NAFTA member country in the Agreement has its own economically justified reasons.

So, according to American experts, an increase in exports will lead to an increase in the number of jobs and, by the way, these calculations have already been justified, despite a relatively short period of time. NAFTA has enabled the United States to increase the number of jobs by increasing exports to Mexico, as well as to reduce production costs and increase the competitiveness of some American industries by moving labor-intensive, material-intensive and environmentally expensive industries from the United States to Mexico. It is assumed that all three American auto giants Ford, Chrysler and General Motors, thanks to integration within the community, will be able to expand production and sales in the coming years and increase their profits by 4 to 10%. Mexican oil wells provide the U.S. with oil supplies with low transportation costs. U.S. exports to Mexico are growing 3 times faster than to other countries in the world.

Canada’s economy is closely linked to america’s. Suffice it to say that the share of the United States in Canada’s foreign trade turnover is approximately 70% and, conversely, Canada’s share is 20%. In the foreign trade turnover of the United States, this is a very high figure, given that in the most integrated grouping, in the European Union, Germany’s share in France’s foreign trade turnover is less than 20%, and France’s share in Germany’s foreign trade turnover, respectively, is above 10%. Only in the late 80s in Canada came to the conclusion that relatively favorable conditions for deepening integration processes with the United States had come, bearing in mind the fact that the effectiveness of Canadian firms began to approach the same indicator of American ones. NAFTA has significantly increased Canada’s attractiveness to foreign investors, while providing Canadians with more opportunities to invest in the economies of their partners in the agreement. Total foreign direct investment in Canada grew by 8.7% in 1994, 9.3% in 1995 and 7.4% (amounting to 180 billion US dollars) in 1996.

The U.S. continues to be both the largest foreign investor in Canada and the largest recipient of direct investment from Canada, accounting for more than half of all outbound Canadian investment.

The creation of NAFTA led to more significant changes in the movement of capital between Canada and Mexico. Canadian investment in Mexico has increased significantly, concentrating in areas such as mining, banking, and telecommunications, while Mexican investment in Canada, while permanent, still lags far behind in size.

Mexico has high hopes for NAFTA and expects, having sharply accelerated the pace and quality of economic growth, to approach the level of socio-economic development in 10 to 15 years to the industrialized countries. A system of measures to liberalize the financial sphere has been introduced, an intensive inflow of foreign investment has begun. The policy pursued in Mexico to attract foreign investment has made it possible to receive annually in the form of foreign direct investment more than $ 12 billion, according to preliminary data in 2001, the total volume of accumulated direct investments will exceed $ 100 billion, which will be about 65% of Canada’s level. This is the best result among developing countries.

Currently, the desire of a number of South American countries to join this economic grouping is already visible. At the meeting of the leaders of 34 countries of the Western Hemisphere in Miami in 1994, it was decided to create a free trade zone of the Americas (TAFTA) by 2005. In 1997, U.S. exports to Latin America and the Caribbean grew 3 times faster (17%) than to other regions of the world (5.6%). Given the high rates of development of Latin American countries in recent years,  it can be assumed that at the beginning of the XXI century. in the Western Hemisphere there will be the world’s largest economic bloc, which will surpass the EU in its scale.

The economic integration of developing countries reflects the desire of young states to accelerate the development of their own productive forces. Examples of such integration groupings are: ASEAN (Association of Southeast Asian Nations), Common Arab Market, Latin American Integration Association (ALADI), Central African Customs Union (CECA), Central American Common Market (CAEP), MERCOSUR (Integration of the Southern Cone). Let’s give a brief description of them.

The Latin American Integration Association (ALADI) was established in 1980 and has 11 member countries: Argentina, Brazil, Mexico, Venezuela, Colombia, Peru, Uruguay, Chile, Bolivia, Paraguay, Ecuador. Within the framework of this association, the Andean and Laplatte groups and the Amazon Pact were formed. ALADI members have concluded preferential trade agreements among themselves.

Association of Southeast Asian Nations (ASEAN). Established in 1967, it includes Indonesia, Malaysia, Singapore, Thailand, the Philippines, Brunei. In July 1997, Burma, Laos and Cambodia joined the association. The total population of this group is 330 million people, the annual total GNP is 300 billion dollars.

MERCOSUR – Common Market of the Southern Cone, created in 1991 by the countries of South America. This organization included Argentina, Brazil, Paraguay, Uruguay. The population of the four countries is 200 million people. the Total GDP exceeds $ 1 billion. Institutional structures and supranational bodies have been established: the Common Market Council, the Common Market Group and the Arbitration Court.

The end of the XX century was marked by the beginning of intensive interaction between the countries of East Asia according to the 7 + 3 formula (ASEAN countries, as well as China, Japan and South Korea). These countries account for 32% of the world’s population, 19% of world GDP, 25% of exports and 18% of imports, as well as 15% of foreign direct investment inflows.

The states formed on the territory of the former Union of Soviet Socialist Republics do not remain aloof from the integration processes. The mechanisms and specifics of the development of integration processes in the post-Soviet space will be discussed below.