Multilateral vs. Regional Economic Integration? - The Middle East and North African Region

Diploma Thesis , 2009 , 115 Pages , Grade: 2,3

Business economics - Economic Policy

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.

Inhaltsverzeichnis (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
• İ. The Agreement
• ii. Trade in Services
• iii. Intellectual Property Rights (IPR) and Harmonization of Standards
• iv. GCC and International Law
• V. Rules of Origin
• vi. Dispute Settlement
• vii. Beyond the Border Measures
• viii. Customs
• ix. Supervision
• 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

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper examines the relationship between multilateral and regional economic integration in the Middle East and North African region (MENA). It analyzes the historical development, economic and political causes, and effects of regional integration agreements (RIAs), comparing these with the objectives and principles of the World Trade Organization (WTO).

• The paper explores the trade creation and diversion effects of regional integration.
• It investigates the dynamic effects of RIAs, such as increased competition, scale effects, and foreign direct investment (FDI).
• The paper analyzes the role of political factors in regional integration, including lobbying, bargaining power, and security considerations.
• It examines the potential benefits and challenges of "South-South" integration agreements.
• The paper discusses the specific case of the MENA region, analyzing its economic integration on a regional and global level.

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction provides an overview of the topic and outlines the paper's objectives. Chapter I examines the theory of trade and welfare, laying the foundation for understanding the potential impacts of regional integration. Chapter II delves into the concept of regional economic integration, exploring its historical development, stages, economic and political causes, and effects. Chapter III focuses on multilateralism and the WTO, outlining its emergence, principles, structure, and achievements. Chapter IV compares multilateralism and regionalism, analyzing the relationship between RIAs and the WTO, and exploring the potential of RIAs as "building blocs" or "stumbling blocs." Chapter V examines the MENA region, analyzing its economic integration on a regional and global level, and discussing specific RIAs such as the Gulf Cooperation Council (GCC) and the Greater Arab Free Trade Area (GAFTA). Chapter VI explores the challenges posed by overlapping RIAs in the MENA region.

Schlüsselwörter (Keywords)

Regional economic integration, multilateral trade, World Trade Organization (WTO), Middle East and North African region (MENA), Gulf Cooperation Council (GCC), Greater Arab Free Trade Area (GAFTA), trade creation, trade diversion, foreign direct investment (FDI), "building blocs," "stumbling blocs," "South-South" integration.

• College: University of Hohenheim
• Grade: 2,3
• Author: Benjamin Hätinger (Author)
• Publication Year: 2009
• Pages: 115
• Catalog Number: V155911
• ISBN (eBook): 9783640694068
• ISBN (Book): 9783640695065
• Language: English
• Tags: Middle East, North Africa, Integration, Economic, Mena, versus, arab, arabic, islam