Why Regionalism Rises Globally

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Big Question Seminar
International Economics
Why Regionalism Rises Globally?

Ronnie Matari
IUP2012044

Introduction
Regionalism is a formal process of inter-governmental collaboration between two or more states. It is a social construction that is shaped and constrained by the members. Regionalism should be distinguished from regionalization, the growth of economic interdependence in an area.

History
Regionalism was started to be more common between the end of The World War II and the beginning of The Cold War since security was one of the most important thing needed by each nation. During the end of 1940s, European regionalism took a concrete form. The agreement establishing the Benelux Customs Union was signed in 1944 by the governments in exile of Belgium, Netherlands and Luxembourg in London, and entered into force in 1947. In 1952, Denmark, Sweden, Iceland, Norway, and Finland established the Nordic Council, an inter-parliamentary organization. The Nordic Council's statutes set out in the 1962 Helsinki Agreement, according to which the parties undertake "to seek to preserve and further develop co-operation between our nations in the legal, cultural and financial areas as well as in matters relating to transport and protection of the environment". In the 1951, the European Coal and Steel Community (ECSC) were established to pool the steel and coal resources of its member-states. The same states established on March 25, 1957 by the signing of the Treaty of Rome the European Atomic Energy Community and the European Economic Community, most important of two European Communities.

Old Regionalism vs. New Regionalism
Regionalism is classified into 2 categories: The Old Regionalism and The New Regionalism. The Old Regionalism appeared before the Cold War. During that time, regionalism was more into politics because security was really important. Since the last 1980’s, international economic environment for regionalism has been change by globalization. The New Regionalism is more to promote free trade between the members by breaking down trade barriers (tariff and nontariff barriers), which is similar to a Trading Bloc. Trading blocs can be classified into 5 different categories: Preferential Trading Areas, Free Trade Area, Custom Union, Single Market, and Economic and Monetary Union.

The Factors Which Causes Regionalism Rises Globally
Economic Capability
Every country wants its people to be capable economically. The benefit from free trade regionalism is, so that a country will have easy especially related tariffs. This will result in increased economic prosperity. Based on regionalism, most countries have joined a trading bloc with other nations. •Preferential Trading Areas: A trading bloc which selectively gives preferential access to certain products from the participating countries. This is done by reducing tariffs, but not by abolishing them completely. •Free Trade Area: A trade bloc which its member countries have signed a Free-Trade Agreement (FTA), which eliminates tariffs, shipping tax, import quotas, and preferences on most goods and services traded between them •Customs Union: A trade bloc between two or more, usually neighboring, countries to remove trade barriers, and reduce or eliminate customs duty on mutual trade. What makes customs union differ from Free Trade Area is because it generally imposes a common external-tariff (CTF) on imports from non-member countries. •Single Market: A trade bloc who can describe any area where people are free to trade goods, invest their money and move to look for work without facing legal, technical or physical barriers. •Economic and Monetary Union: A type of trade bloc which is composed of an economic union (common market and customs union) with a monetary union. The formation of a trading bloc in term of regionalism, both bilateral and multilateral, is to avoid economic crisis. European Union is an example of a monetary union where the member states...
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