Economic Integration And International Relations

We live in a world that throughout the years has overcome many obstacles related to the relationship between countries and their own well- being, creating as a result tighter bonds and the transition from independent nations to interdependent nations that work together for a better quality of life and for the fulfillment of their specific interests. When referring to the economic and commercial prosperity, the strengthening of international relations, the presence in the international community and the examples being set by developed countries for their level of regional economic integration, the European Union is the clearest example of the highest achievement is these matters. In the official webpage of the European Union this is quoted: “Peace, prosperity and freedom for its 498 million citizens – in a fairer, safer world.” With this brief definition of what the main objective of the EU is, where does the European Union stand on economic integration as a model? Why is economic integration so important for the world? What is the EU’s major impact on international relations and economic integration that serve as lessons for other countries? These questions will be answered or analyzed more thoroughly showing the importance of the European Union as a role model of regional economic integration and international relations for the world.

The European Union is an economic and political unification between 27 democratic European member states. Its economic integration was based primarily on political objectives to prevent any confrontations or conflict after World War II, when restoration was necessary after all the bloodshed, chaos, uncertainty and economic struggle brought by the war. The EU has overcome the three initial levels of integration that are Free Trade Area, Customs Union and Common Market. It has advanced now to the level of Economic Integration and as a result has accomplished “Frontier-free travel and trade, the euro (the single European currency), safer food and a greener environment, better living standards in poorer regions, joint action on crime and terror, cheaper phone calls, millions of opportunities to study abroad … and much more” (EUROPA, 2010). It is easy to imagine how two countries, like Colombia and the United States, could have great cooperation between them in order to create mutual commercial and living standard benefits with a great level of support, because of the globalized world and diplomatic relations that have brought them together. But consider twenty- seven countries, with twenty- seven languages, cultures, geographical characteristics, governments, tendencies, histories, and diverse characteristics coming together and sharing so many things as an integrated group, how can this not be an example to be followed by other countries around the world? In an interview made to Charles A. Kupchan [1] , Senior Fellow for Europe Studies, at the Carnegie Council for Ethics in International Affairs on April 8th, 2010, he was asked: “To what extent do you think the European Union is a model for how enemies become friends and to what extent is it so completely unique that it cannot serve as a model?” he suggests that the European Union is where it is today thanks to “Economics in the surface of geopolitics”. With this once again the EU is seen as a postwar response that after it created good political relationships with the other countries led for economic integration to “create its own logic” as stated by Kupchan in his answer. This can serve as an example of one of the lessons that the European Union leaves the rest of the world, that as Kupchan’s book is called: “How Enemies Become Friends: The Sources of Stable Peace” (Princeton University Press, 2010) with a bit more of cooperation and the use of Diplomacy, any group of countries in Latin America or the rest of the world can have greater benefits as those received by the members of the European Union, solving their differences and integrating economically.

“The current European model of economic integration, through three essential components: the political commitment, the legal and institutional system, and the set of common actions and policies in favor of integration”. (Rueda-Junquera, 2006) The importance of economic integration is defined in terms of these three main components. The first, political commitment can be seen as one of the hardest conditions that have to be fulfilled in order for the economic integration theory to bring benefits to a country or a group of countries. Although it is difficult to achieve, sometimes it can even be harder to sustain this commitment over time with so many internal and external factors that can come into the international panorama. The second element mentioned by Rueda-Junquera is the legal and institutional system. This means that although the approach of integration is economic, there has to be a law system looking over its process. Rueda-Junquera defines the “Community Law” that is characterized by its primacy, meaning that it is applied before any local or regional law of the member states, and its direct applicability. Finally, the third component is the set of common actions and policies in favor of integration. This shows how integration has been shifted into the economic objectives of the countries. These three elements, along with cooperation in the international community, shape the importance of economic integration, as they link progress, economic growth, and general welfare as the motor for the fulfillment of established goals by the different communities of the world.

There are some characteristics about the European Union that are well known by people around the world. For example, that its 27 members share a common currency called the Euro (€), that if you plan to travel to any of its member states and you are coming from Colombia, for example, you need a Schengen visa in order to get in, that your passport gets stamped once in the country where you enter de European Union and there is free movement of people between member states, amongst others. But what is the EU’s major impact on international relations and economic integration that serve as lessons for other countries? We are told that “The success of the European Union (EU) in reaching a relatively high level of integration among its constituent member states over a fifty-year period has made it an attractive model for regional integration efforts elsewhere in the world.” (Kirchner, 2006) It is certain that the EU has become a model for countries that are just starting their integration processes and that stand in the first or second level of regional integration. It serves as a motivational figure for countries looking forward to having such a level of sustainability and development, showing that although many years can pass with many obstacles and crisis to face, it is possible to always move forth.

Also, “Flows of Foreign Direct Investment (FDI) have also been induced by the integration policies of the EU” (Mc Donald. Vertova. Garcia; 2000) This shows that having such stability thanks to the economic integration policies makes a country more attractive to foreign investors. How many countries wish they had a higher FDI in order to have economic and industrial development? Some countries have many natural resources, like the Colombian case, but no technology and knowledge to exploit them. This needs FDI to cover those needs. The EU shows how this is possible with a good level of economic integration. Another lesson relates to “economic integration leads to significant relocation of production activities”. (Mc Donald et al. 2000), this shows countries that sometimes production factors are more efficient if relocated, if you are working with another country it is easier to locate the factors of both parties according to what is best. There is another lesson related to what was just mentioned, which is that the European Union has achieved many good and positive things as one block, but as a block of countries that work as a team to increase their benefits as a whole. “Regional economic integration provides incentives for firms to adopt strategies that promote improvements in competitiveness”. (Mc Donald et al. 2000) Here is where transnational actors’ importance is reflected, as Transnational Companies (TNC’s) look for opportunities in the international market, economic integration in the EU is an example of well functioning firm relations.

Some other lessons that are left by the European Union is that for example with the 2009 economic crisis born in the United States, many economies around the world where affected in terms of trade, as the income of the people and their purchasing power dropped significantly, and therefore there was no money for trade. In the case of the European Union, ” is a relatively closed economy, with extra-regional trade accounting for a small proportion of gross domestic product (GDP), which suggests that the crisis was transmitted from the US to Europe primarily through financial, not trade, channels.” (Ariff, M. 2009) Therefore, the crisis could have had worse consequences for Europe, but its economic integration level made it strong enough to not be affected by it in such a harsh way. “.. this multi- level industrial relations system reflects a history of informal and gradual development as well as deliberate institution- building”. (Marginson, P. Sisson, P. 2003) with this a lesson of patience can be considered. Some countries want and look for quick results on their economic integration processes, but as each country has its own interests and policies, economic integration escalation takes time. Just look how long it has taken Colombia and the US to sign a FTA. The European Union has grown in its integration in a step by step way, and although it takes time to be as high on the levels of economic integration, is a long term investment that brings very big and positive benefits.

Finally, it can be concluded that the European Union has clearly set a model and example to be followed by developing countries that are just starting their regional economic integration with some neighboring or distant countries. It has showed the importance of economic integration as it combines many elements for the well- being of the peoples and has proven that cooperation is completely necessary to accomplish integration goals. Many lessons have been left by the European Union for other countries and although some difficulties may present themselves along the way, like the conflict between presidents in the case of Colombia and Venezuela, it is clear that a well- rooted integration system, an established presence in the international system, decision making based on honesty, legality and cooperation, and positive international relations lead to the achievement of a sustainable and fulfilling regional economic integration.

“Though richly diverse, EU countries are united in their commitment to peace, democracy, the rule of law and respect for human rights. They seek to uphold these values in Europe and beyond, to build and share prosperity, and to exert their collective influence by acting together on the world stage.”

(EUROPA, 2010)