1 The phenomenon of regional integration
Regional integration schemes have multiplied in the past few years and the importance of regional groups in trade, money, and politics is increasing dramatically. Regional integration, however, is no new phenomenon. Examples of Staatenbiinde, Bundesstaaten, Eidgenossen-schaften, leagues, commonwealths, unions, associations, pacts, confederacies, councils and their like are spread throughout history. Many were established for defensive purposes, and not all of them were based on voluntary assent. This book looks at a particular set of regional integration schemes. The analysis covers cases that involve the voluntary linking in the economic and political domains of two or more formerly independent states to the extent that authority over key areas of national policy is shifted towards the supranational level.
The first major voluntary regional integration initiatives appeared in the nineteenth century. In 1828, for example, Prussia established a customs union with Hesse-Darmstadt. This was followed successively by the Bavaria Wurttemberg Customs Union, the Middle German Commercial Union, the German Zollverein, the North German Tax Union;, the German Monetary Union, and finally the German Reich. This wave of integration spilled over into what was to become Switzerland when an integrated Swiss market and political union were created in 1848. It also brought economic and political union to Italy in the risorgimento movement. Integration fever again struck Europe in the last decade of the nineteenth century, when numerous and now long-forgotten projects for European integration were concocted. In France, Count Paul de Leusse advocated the establishment of a customs union in agriculture between Germany and France, with a common tariff bureau in Frankfurt.1 Other countries considered for membership were Belgium, Switzerland, Holland, Austria-Hungary, Italy, and Spain. In
1 See Paul de Leusse, `L'Union Douaniere Europeenne,` Revue d'Economie Politique 4 (1890), 393-401.
Austria, the economist and politician Alexander Peez forged plans for a Middle European Zollverein that included France.2 And Count Goluchowski, the Minister of Foreign Affairs of Austria-Hungary, passionately advocated the idea of a united Europe in his public speeches. Many other politicians, economists, and journalists made proposals for European union which circulated through the European capitals during that decade.3 Ultimately, all the projects came to naught.
Haifa century later, the idea of European integration was re-invented and the process of merging European nation-states into one prosperous economy and stable polity began. The first step was taken with the creation of the European Coal and Steel Community (ECSC) in 1952. In 1957, Germany, France, Italy, Belgium, Luxemburg, and the Netherlands signed the Treaty of Rome establishing the European Community (EC).4 The first enlargement of the EC occurred in 1973, with the accession of the United Kingdom, Denmark, and Ireland. Greece joined in 1981, Spain and Portugal in 1986. Nine years later, Austria, Finland, and Sweden became the Community's newest members. In the meantime, European integration had moved beyond trade. In 1979, the European Monetary System was established. And in 1992 the Community adopted the Maastricht Treaty on European Monetary and Political Union. By November 1993, the Community had changed its name to the European Union (EU) to mark the deep level of integration attained.15
Integration is not an exclusively European phenomenon, of course. In the 1960s the Latin American Free Trade Association, the Andean Pact, and the Central American Common Market were launched. In the early 1990s, more than half a dozen new integration projects were started in Latin America, the most notable being the Mercado Comun del Sur
2 Alexandre Peez, `A Propos de la Situation Douaniere en Europe,` Revue d'EcoHomie
Politiqttc 5 (February, 1891), 121-139; see also his Zur Neuesten Handehpolitik (Vienna:
Commissionsverlag v. G. Szelinski, 1805).
3 See, for example, Paul Leroy-BeauHeu, `De la Necessite de Preparer une Federation
Eufopeenne,` L'Econotniste Frangais 2 (September, 1898), 305-307; Gustavo Dc
Molinari, `A Zollverein in Central Europe,` Gimton's Magazine 12 (January 1897),
38 46; Handelskammersekrctar Wcrmcrt, `Einigc Befrachtungcn fiber einen Mkteleur-
opaischen Zollverein,` Annalen des Deutschen Reichs fiir Gesetzgebung, Venoalmng mid
Statisrik 12 (1888), 943-954. For a good survey, see Ernst Francke, `Zollpolitische
Einigungsbestrebungcn in Mitteleuropa wiihrend des letzten Jahrzehnts,` Schriften des
Vereitn fur Socialpolitik 90 (Leipzig, 1900), 187-272.
4 The Treaty of Rome established two new communities: the European Economic
Community (EEC) and Che European Atomic Energy Community. The EEC has been
referred to as the European Community (F,C) for many years. I will follow this
convention throughout the book.
5 I use the terms European Community and European Union interchangeably throughout
(MERCOSUR) comprising Argentina, Brazil, Paraguay, and Uruguay. In North America, a Free Trade Agreement between the United States and Canada was signed in 1989. This agreement grew into the North American Free Trade Agreement (NAFTA) when Mexico joined in 1994. In Asia, the most notable regional grouping is the Association of Southeast Asian Nations (ASEAN), formed in 1967. In 1992 members agreed to establish gradually an ASEAN Free Trade Area. One of the most rapidly expanding groups is the Asia Pacific Economic Cooperation forum (APEC). It was launched in 1989 by Australia, New Zealand, Japan, South Korea, Canada, the United States, and the ASEAN countries. Today it comprises eighteen members. Malaysia also recently promoted the idea of a Japan-centered Asian bloc, the East Asian Economic Grouping (EAEG).