D Philippe De Lombaerde e L Editor o m b a e r d e E d . 2006 World Report on Regional Integration U N U S R 1 NITED ATIONS NIVERSITY ERIES ON EGIONALISM Multilateralism, (cid:2) Regionalism and M u l t i l a Bilateralism in Trade t e r a l i s m , and Investment R e g i o n a l i s m In Collaboration with: a n UNCTAD, ECA, ECLAC, ESCAP, ESCWA, UNECE, UNU-WIDER d (cid:5)(cid:6)฀(cid:4) MULTILATERALISM,REGIONALISM ANDBILATERALISMINTRADE ANDINVESTMENT UnitedNationsUniversitySeriesonRegionalism Editor,PhilippeDeLombaerde Althoughthemostrecentyearshaveleftuswithanumberof‘failed’orstagnating integration projects in different parts of the world, the underlying idea behind this WorldReportisthat–fromalongertimeperspective-thereisaneedforastronger regional governance level, situated between the national and global levels. This is relatedtothesimplefactsthat,ontheonehand,manychallenges(economic,security, environmental,…)posedtohumanitycannotbeadequatelyaddressedatthenational level,andthat,ontheotherhand,aneffectivemultilateralsystemneedssomeform ofregionalorganisation.Thisregionalgovernanceleveliscomplementaryto,notin contradiction with, the other governance levels in a modern and flexible system of multi-levelgovernance. Awareofthisemergingreality,theUnitedNationsUniversity-ComparativeRegional IntegrationStudies(UNU-CRIS)tooktheinitiativetolaunchanewseriesofWorld Reports in order to monitor trends and prospects for regional governance. This has been made possible with the support of the GARNET Network of Excellence, UNCTAD,thefiveregionalUNEconomicCommissions,andUNU-WIDER. ThisWorldReportonRegionalIntegrationfillsagapinthesupplyofworldreportsand islikelytobecomealeadingreferencepointforfuturedebatesamongpolicy-makers, academicsandthebroaderpublicontheroleofregionsinworldgovernance. Multilateralism, Regionalism and Bilateralism in Trade and Investment 2006 World Report on Regional Integration PhilippeDeLombaerde(editor) InCollaborationwith: UNCTAD,ECA,ECLAC,ESCAP,ESCWA,UNECE,UNU-WIDER AC.I.P.CataloguerecordforthisbookisavailablefromtheLibraryofCongress. ISBN978-1-4020-5950-6(HB) ISBN978-1-4020-5951-3(e-book) PublishedbySpringer, P.O.Box17,3300AADordrecht,TheNetherlands. www.springer.com Printedonacid-freepaper AllRightsReserved ©2007Springer Nopartofthisworkmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformorby anymeans,electronic,mechanical,photocopying,microfilming,recordingorotherwise,withoutwritten permissionfromthePublisher,withtheexceptionofanymaterialsuppliedspecificallyforthepurpose ofbeingenteredandexecutedonacomputersystem,forexclusiveusebythepurchaserofthework. ENDORSEMENTS The EU Framework VI GARNETNetwork of Excellence was created to bundle the capacityofmorethan40universitiesinordertojointlyundertakeinnovativeresearch onglobalisation, regionalisationandtheroleoftheEU,andregionsingeneral, in worldgovernance.Inthiscontext,GARNETactivelysupportedthelaunchingofthis newWorldReportonRegionalIntegration.Theseriesislikelytoestablishitselfas an obligatory reference for policy-makers and academics involved in thinking and mouldingtheglobalgovernancearchitectureofthefuture.Itfillsagapintheexisting supplyofworldreports. ProfessorRichardHiggott,DirectoroftheCentrefortheStudyofGlobalisationand Regionalisation at the University ofWarwick, and Senior Scientist and Director of theGARNETNetworkofExcellence The African, Caribbean and Pacific Group of States (ACP Group) welcomes the World Report on Regional Integration, which provides a holistic and pragmatic perspective on the role of regions in world governance and international affairs. Themostsignificantanduniquevalueofthisvolumeisthatitpresentsanenhanced understandingoftheprocessesofregionalintegrationinpolitical,economic,social andculturalspheres.ItisaninvaluablereferencefortheACPGroupinitsendeavour tofurtherenhancesolidarityandunityamongstitsmemberstates,whilstaddressing thechallengesofpovertyeradication,sustainabledevelopmentandglobalization. SirJohnR.Kaputin,KBE,CMG,Secretary-GeneraloftheACPGroup Globalgovernanceisaconcernofnotonlyglobalorganisationsbutalsoofallindivid- ualstatesandofregionalco-operationagreementsamongsovereignstates.In2001, theUnitedNationsUniversityhaslaunchedUNU-CRIS,aresearchandtrainingpro- grammeoncomparativeregionalintegrationtostudytheroleofregionalintegration in global governance. The present first volume of the World Report on Regional IntegrationisatimelyproductoftheresearchundertakenatUNU-CRIS.Thisnew seriesofWorldReportswillcertainlycontributetothediscussionontheinteraction between regional and global governance. And by bringing together insights from differentpartsoftheUNsystem, inparticularthefiveUNregionaleconomiccom- missionsandUNCTAD,thisreportwillalsocontributetoabetterunderstandingof theroleofregionsintheUN. Hans van Ginkel, Under-Secretary-General of the United Nations and Rector ofUNU v vi ENDORSEMENTS TheWorldReportonRegionalIntegrationbringstogetherawell-balancedmixof economicanalysis,factsandpoliticalperspectivesonthetopicofregionalintegra- tion.Themostvaluableanduniquecontributionofthisvolumeistheenhancedclarity itbringstothecomplexpictureoftradeandinvestmentintegration,theentanglement ofwhichpointstotheneedformoreeffectiveregionalgovernanceasabuildingblock ofmultilateralgovernanceinthisarea.Astheworld’smostdynamictradingregion, AsiaandthePacificisakeyplayerinthisprocess,andtheUNESCAPsecretariat,in itsservicetotheregion,willcontinuetoaccordhighprioritytothispolicyobjective. Kim Hak-Su, Under-Secretary-General of the United Nations and Executive SecretaryofUNESCAP TABLE OF CONTENTS Endorsements v Acknowledgements ix Introduction 1 PhilippeDeLombaerdeandLukVanLangenhove, UNU-CRISandGARNET SectionI Multilateralism,Regionalism andBilateralisminTradeandInvestment 5 Chapter1 DevelopingCountries’ParticipationinRegional Integration:Trends,ProspectsandPolicyImplications 7 UNCTAD Chapter2 PreferentialTradingArrangementsforDeveloping Countries 25 BasudebGuha-Khasnobis,UNU-WIDER Chapter3 MakingMulti-LevelRulesWork:TradeandInvestment RulesinRegionalandBilateralAgreements 37 StephenWoolcock,UNU-CRIS,andLSE Chapter4 ReconcilingRegionalismandMultilateralism:Towards MultilevelTradeGovernance 59 BrigidGavin,UNU-CRIS SectionII RegionalReports 73 Chapter5 Asia-PacificRegionalismQuoVadis?Chartingthe TerritoryforNewIntegrationRoutes 75 TizianaBonapace,MiaMikic,TradeandInvestmentDivision, ESCAP Chapter6 RegionalIntegrationintheWesternHemisphere: AnOverview 99 InternationalTradeandIntegrationDivision,ECLAC Chapter7 RegionalEconomicIntegrationinAfrica 127 ECA vii viii TABLE OF CONTENTS Chapter8 DevelopmentsinRegionalIntegrationinWestern AsiaandArabRegion 159 ESCWA Chapter9 TradeandIntegrationin(South)EastEurope, Caucasus,andCentralAsia 197 UNECE Chapter10 RegionalIntegrationintheEuropeanUnion: EnlargementWithoutConstitution 229 UNU-CRIS Annex UNU-CRIS/GARNET 255 ACKNOWLEDGEMENTS This Report is the result of a collaborative effort involving several institutions and individuals. Wewouldliketothankanumberofpeopleinparticular.Firstofall,wewouldlike tothankRichardHiggott,leadscientistoftheGARNETNetworkofExcellenceand directoroftheCentrefortheStudyofGlobalisationandRegionalisation(CSGR)and professor atWarwick University, for his support to this initiative and his readiness tomergetheeffortsofGARNETandtheUNorganisations.Second,wewouldlike tothankThoukaAl-Khalidi,formerdirectoroftheGlobalizationandRegionalInte- grationDivision(GRID)atESCWAforhercrucialroleinforgingthecollaborative relationshipbetweenUNUandtheUNRegionalCommissions. We also want to mention the following people without whom this Report would nothavebeenpossible: From the UN Commissions: Hakim Ben Hammouda and Joseph Atta-Mensah (ECA),OsvaldoRosalesandMikioKuwayama(ECLAC);RaviRatnayake,Tiziana Bonapace and Mia Mikic (ESCAP); Nazem Abdalla and Abulgasim Abdullah (ESCWA);andVirginiaCram-MartosandLorenzaJachia(UNECE). AtUNCTAD:LakshmiPuri,BonapasOngugloandLucianCernat. AtUNU-WIDER:BasudebGuha-Khasnobis. From the GARNET Network of Excellence: Michael Schulz of Göteborg University. AtSpringerScience+BusinessMedia:MyriamPoortandEstherOtten. At UNU-CRIS: Aurora Mordonu, Ana-Cristina Costea, Isabella Torta, Giulia Pietrangeli, SteveWoolcock, BirgerFühne, BrigidGavin, MalgorzataWesolovska, ElkeHoubaert,and,lastbutnotleast–EvelineSnauwaert. PhilippeDeLombaerde LukVanLangenhove, Bruges ix