In writing about regionalism in global governance over the course of the past several years we primarily focused on the need to create platforms of cooperation between regional integration arrangements (and their respective development institutions) as well as cooperative links between these regional platforms and global organizations such as the WTO, IMF and the World Bank. In particular, we argued in favor of a platform for regional integration arrangements to work closely with the WTO on issues of trade liberalization, regional development banks to coordinate their policies and projects with the World Bank and the regional financing arrangements (RFAs) to cooperate with the IMF. While there has been some headway in this direction in recent periods (in particular due to the creation of the respective platform of the World Bank with the regional development banks in 2023), we believe there is scope to take the role of regionalism in global governance to a higher level. In what follows, we briefly explore the possible modalities of how regional integration arrangements and their development institutions could be integrated into the frameworks of the respective global institutions, including via full membership in such organizations alongside country members.
The first important thing to realize about regionalism in global organizations is that in virtually all key global economic forums – whether the WTO, the IMF or the G20 – regionalism is already very much present and is playing an increasingly important role. This is particularly the case with the EU that has a full membership status in the WTO as well as in the G20. Going forward, in expanding the role of regional arrangements in global organizations, one of the initial steps could be to explore the possibility of according the status held by the EU to other regional arrangements. This has already been the case with the granting of G20 membership to the African Union and the EU status as a regional bloc in this global forum provided a stronger rationale for such an expansion in G20 membership.
As regards the G20, our call has been for the creation of a platform for regional integration arrangements in the form of a “regional 20” (R20) engagement group[1]. With the African Union becoming a member of the G20, there are now calls to explore the possibility of other regional blocs such as ASEAN, to target full membership in this global platform[2]. One possible way of approaching the issue of regionalism in the G20 would be to use the R20 (regional 20) engagement group as a way to establish the criteria for the expansion in G20 membership for regional arrangements. In any case, with the accession of the AU, the process of G20 membership expansion is unlikely to end, with other regional integration blocs seeking to emulate the experience and the position held by the EU and the AU.
In the case of the WTO, the membership of the EU creates scope for other regional integration arrangements in the form of a custom union to apply for WTO membership. Such regional blocs may include the likes of Mercosur and the Eurasian Economic Union, provided such regional blocs comply with the legal requirements and norms of the WTO, including notification requirements[3]. Going forward, the reform of the WTO in our view needs to be accompanied by an expansion in the modalities of the organization’s cooperation with RTAs, including the possibility of a forum/platform for such arrangements in the WTO, an observer/partnership/full membership status as well as the incorporation of RTAs into the design and the commitments drawn for the upcoming WTO trade liberalization rounds. In the longer term, when most of the leading RTAs are well on track in cooperating closely with the WTO on trade policy issues, there could be scope for launching “regional trade liberalization rounds” coordinated by these regional trading arrangements with the WTO on the basis of mutual market access commitments and their multilateralization.
Within the IMF there is no full membership for the EU, but an observer status is accorded to the European Central Bank at the Executive Board discussions (on issues of mutual interest), while the European Commission has an observer status in the Fund’s IMFC meetings. The array of observers at the IMFC meetings could be expanded to include representatives of other regional blocs, particularly as they progress further the sphere of regional integration and macroeconomic/monetary policy coordination. There may also be a case for creating a partnership circle for the IMF that includes the regional financing arrangements (RFAs) that have regularly participated in the consultations/discussions with the Fund as part of the IMF’s outreach activities vis-à-vis such regional institutions[4]. The Fund could then in the longer term potentially consider creating “regional financing facilities” that co-finance/address issues of regional economic stability together with the relevant RFAs and member countries.
In the case of the World Bank, while there is no special status secured by the EU, regional integration arrangements and/or their regional development banks could also be accorded observer/partnership status in the organization. There could also be a case for expanding the array of regional financing facilities by the World Bank – most notably in the environmental sphere where cross-country spillover effects raise the need for wider regional measures. Such financing facilities could be designed to finance regional projects together with the relevant regional development banks and in coordination with the regional integration arrangements. In making further strides towards building closer ties with regional institutions, the World Bank could make use of the already existing platform that since 2023 brought together the leading MDBs, including regional development banks[5].
The creation of layers of regional partnerships in key global economic institutions could serve to reduce the tensions between global and regional organizations, including with respect to contradictions in the conditionality faced by national economies from global and regional arrangements or complications associated with cross-conditionality. At the same time, a greater representation of regional arrangements in global organizations could raise the scale of coordination and resources that could be effectively deployed at the global and regional levels to address economic vulnerabilities and downturns. It could also address the incomplete state of the integration of regionalism into global institutions (primarily via the participation of the EU) and expand the scope for a greater representation of the Global South economies in global economic governance.
In the end, the regional layer of global governance could operate on the basis of horizontal platforms among regional arrangements as well as through their integration into the operation of global institutions such as the IMF, World Bank, and the WTO. Importantly, there is already a notable role and presence of regional arrangements in virtually all key global economic organizations. The task at hand is to focus on extending the position held by the EU to more regional arrangements in the WTO, the G20 and the Bretton Woods institutions. Such an integration of regional arrangements into global organizations should be conducive to forging greater connectivity between regionalism and globalism/multilateralism, reducing the likelihood of tensions between these two forces of international economic cooperation.
[1] https://brics-plus-analytics.org/connecting-g20-with-the-rest-of-the-world/
[2] https://eastasiaforum.org/2024/12/14/aseans-path-to-g20-membership/
[3] https://notifications.wto.org/en/notification-requirements/regional-trade-agreements
[4] https://www.imf.org/en/News/Articles/2024/10/23/pr-24391-joint-imf-regional-financing-arrangements-pr-on-the-9th-high-level-rfas-dialogue
[5] https://brics-plus-analytics.org/imf-world-bank-annual-meetings-the-emergence-of-a-platform-for-mdbs/
Yaroslav Lissovolik, Founder, BRICS+ Analytics
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