On July 17-18, 2023 an EU-CELAC summit of the heads of state and governments is to be held in Brussels, with some of the possible themes for discussion featuring the progress in the EU-MERCOSUR FTA deal. Such an FTA agreement would be one of the most significant steps directed at boosting economic cooperation between regional integration blocks and would represent yet another sign of the rising prominence of regionalism in the world economy. In fact, throughout the past several months a number of state leaders have come up with important initiatives in the sphere of cooperation among the regional integration blocks and their development institutions.
In Latin America, one of the signs of the rising importance of regional integration issues is the greater momentum towards regional cooperation that is spearheaded by Brazil’s President Lula Da Silva. Apart from bringing back Brazil into UNASUR, Lula is also actively advocating the creation of a regional currency for Latin America as well as a common currency for BRICS economies. MERCOSUR is also coming back to life and apart from the revitalized discussions on an FTA deal with the EU, there are efforts to advance the block’s expansion and to explore the possibilities of trade liberalization with some of the key partners such as China.
Another interesting manifestation of country leaders coming to the realization of the rising importance of regionalism is the effort by French President Emmanuel Macron to launch a platform for multilateral development institutions, most of which are represented by regional development banks such as the African Development Bank and the Asian Development Bank. In particular, on June 22-23 France hosted the Summit for a New Global Financial Pact that adopted a “Multilateral Development Banks vision statement” calling for the creation of a global platform for multilateral/regional development banks. The corresponding declaration contains the following key provisions related to regionalism:[1]
- Call on MDBs to work as a system, also in cooperation with regional and national development banks as well as UN agencies and philanthropies, forming the heart of a wider global financial architecture, based on comparative advantages, supported by civil society.
- Deepen cooperation among and between MDBs and concessional windows and thematic funds to improve co-financing, facilitate countries’ ease of access to financing, streamline internal procedures, and achieve better leverage for LICs, MICs and Small Island Developing States.
The creation of a platform for regional development institutions with coordination from the IMF and the World Bank has long been advocated by myself as a means of addressing environmental issues as well as the mobilization of resources to finance the needs of least developed economies:
“One global trend that will likely favor the creation of platforms among the regional development banks is the environmental agenda that transcends national boundaries and requires greater cooperation across countries and regions. Building shared portfolios of “green projects”, harmonizing the standards across regional development banks on the implementation of such projects may enhance the prospects of meeting the ambitious environmental goals in leading developed economies and in advancing the green agenda across the economies of the Global South” [2].
Apart from the creation of a global platform for regional development banks, I also argued in favor of such a cooperative framework to be launched among the regional integration blocks and the regional development institutions of the BRICS countries[3]. And while there has been little headway on this front in the past 5-6 years, more recent developments in the sphere of “integration of integrations” are somewhat more encouraging. In particular, Belarus President Lukashenko spoke in favor of co-integrating the formats of BRICS, the Shanghai Cooperation Organization (SCO) and the Eurasian Economic Union. Such a platform of “integration of integrations” may well be launched in 2024 during Russia’s BRICS chairmanship, with the main regional integration blocks from each one of the BRICS core members participating in this network. The eventual BRICS+ formation for regional integration blocks can bring together BIMSTEC, Eurasian Economic Union, African Union/AfCFTA, MERCOSUR, SCO – a potential grouping that has already been dubbed as BEAMS[4].
In the coming months there may be further crucial developments related to the rising role of regionalism in the global economy. The 2023 BRICS summit in Cape Town will feature efforts by South Africa to bring the African continent into closer cooperation with BRICS. There will also be greater coordination among the BRICS countries to support Africa’s AfCFTA effort – something that will necessitate notable trade liberalization for African products not only from individual BRICS members, but also from their respective regional integration blocks. Apart from the possibility of the African Union working more closely with BRICS, there is also the likelihood that this African block may become a member of the G20 grouping.
Overall, it appears that the world’s policy-makers are starting to wake up to a key global trend characterized by greater activism and role of regional integration blocks and their development institutions. These trends open up new possibilities for the world economy to build new communication lines, reduce trade barriers and boost economic growth. The hope is that this “regional track” will serve to bridge the widening North-South divides via creating cooperative global platforms for trade and investment.
[1] https://www.elysee.fr/en/emmanuel-macron/2023/06/23/multilateral-development-banks-vision-statement
[2] Y. Lissovolik. Transforming the global economy: a key role for the IFIs. July 29, 2022. Valdai club. https://valdaiclub.com/a/highlights/transforming-the-global-economy-a-key-role/
[3] Yaroslav Lissovolik. BRICS-plus: alternative globalization in the making? World Economic Forum (WEF), 2018: https://www.weforum.org/agenda/2018/01/brics-plus-an-alternative-to-globalization-in-the-making
[4] Lissovolik, Y. BEAMS of the Sunrise: A Look at BRICS 5-Year Cycles. / Valdai International Discussion Club. June, 2018.