With multilateral trade liberalization via WTO trade rounds stalled for decades, one of the key channels of trade liberalization in the world economy becomes regional integration and trade openness across regional integration blocs. It is important to note that there is currently no global platform for regional integration arrangements, something that is a limiting factor for international economic diplomacy and the prospects of a new momentum in global trade liberalization. After the launching of the Mercosur–EU trade deal the “mega-regional” format may take on greater prominence in the world economy and while the EU positions itself as one of the key drivers of mega-regional deals, China and ASEAN in Asia potentially serve as an alternative pole in the formation of such platforms (RCEP being the largest mega-regional thus far in Asia/Pacific). In what follows we briefly look at the potential scenarios for mega-regionalism and the possible modalities of its incorporation into the existing structure of global economic governance.
At this stage the EU as well as EFTA are among the undisputed global leaders in concluding “RTA-to-RTA” accords. The EFTA bloc has signed and implemented FTAs with the South African Customs Union (SACU) and the Gulf Cooperation Council (GCC), while also concluding FTAs with Central American States (Costa Rica, Guatemala and Panama) and creating a European Economic Area (EEA) with the EU. Other accords are in the process of negotiation or ratification, in particular, the Mercosur–EU FTA accord as well as the EU–GCC FTA agreement (suspended since 2008) (European Commission, 2024). The ASEAN–EU action plan for 2018–2022 envisaged further efforts to attain the conclusion of a free-trade agreement and while the prospects of an “RTA-to-RTA” accord are unclear at this stage, the ASEAN economies (Indonesia, Singapore (digital agreement), Philippines, Thailand) account for the majority of trade deals currently negotiated by the EU with individual economies (European Commission, 2024).
In the developing world, it is Africa that has undertaken the most significant effort to bring its regional integration arrangements closer together. In particular, the African Union (AU) coordinates and cooperates with such regional economic communities (RECs) as the Southern African Development Community (SADC), the Arab Maghreb Union (UMA), the East African Community (EAC), the Economic Community of West African States (ECOWAS), the Economic Community of Central African States (ECCAS), the Intergovernmental Authority on Development (IGAD), the Community of Sahel–Saharan States (CEN–SAD) and the Common Market for Eastern and Southern Africa (COMESA).
Overall, however, the “integration of integrations” is still a relatively rare phenomenon and its implementation has been hampered by the coordination difficulties of conducting talks and ratifying agreements across a large number of participants. There may also be issues related to the implementation of such agreements as the economic implications of such trade accords may be difficult to gauge ex-ante. Furthermore, regionalism as an intermediate governance layer between global institutions and country-level governance may be perceived as a risk to national sovereignty and a threat to the integrity of multilateral global institutions.
There may be a number of advantages emanating from the creation of platforms for regional integration arrangements. One is the scaling of international best practices in the spheres of macroeconomic, environmental and digital economy policy from the leading economies to their regional partners as well as spreading such practices globally across continents. But perhaps the most important track for economic cooperation within such mega-regional platforms is the possibility of trade liberalization undertaken at the level of regional blocs rather than solely at the country level. In fact, in most of the leading regional integration arrangements trade policy is delegated in various degrees to the regional level—this concerns Mercosur, the EU, the GCC as well as to various degrees to EFTA and ASEAN.
As has been argued in the preceding years, one of the potential scenarios in the sphere of building platforms for regional integration blocs could be an EU-led effort that would bring together the largest regional integration arrangements that have cooperated extensively with the European Union. One of the key near term “integration of integrations” in this EU-led track could be the EU–Mercosur FTA that has been revitalized after the coming of Lula to power in Brazil. In line with such a scenario on December 6, 2024 the leaders of both blocs finalized trade talks for the EU–Mercosur partnership agreement.
The clinching of the Mercosur–EU deal is likely to deliver impulses for more such agreements to be concluded between regional integration blocs. One of the next ones in line may be the EFTA–Mercosur deal: in March 2024, EFTA and Mercosur agreed to resume talks on an FTA (that has previously gone through 10 rounds of talks), with the first meeting on the possible trade deal taking place in April 2024 for the first time since 2019 (Ministry of Foreign Affairs, International Trade and Worship of the Argentine Republic, 2024) and then more recently in March 2025[1].
At the same time, other scenarios in the evolution of mega-regional deals may also be possible, including the creation of mega-regionals on the basis of BRICS+ cooperation among the leading regional integration arrangements of the Global South in which BRICS economies are members. Another possibility is for the Global South to prioritize bilateral agreements among the leading RTAs – such as the AfCFTA and Mercosur – without using the BRICS+ format as such. This bilateral option may prove to be less prone to coordination delays that could render the BRICS+ approach too time-consuming and complex.
In terms of the modalities for incorporating the mega-regional trends into the current construct of the global economy, one possibility could be platforms for the regional integration arrangements within the UN or the G20. In particular, after the accession of the African Union as a member of the G20, there could be scope for creating an engagement group called the “regional 20/R20” that could advance economic cooperation among the regional integration institutions at the global level. An important role in this respect could also be played by the World Trade Organization (WTO) that could assume the function of coordinating the regional integration arrangements and the liberalization initiatives that emanate from these integration blocs.
In the end, the increasing use of “integration of integrations” may serve to bring greater coherence and structure to the growing set of trade alliances in the global economy. For developing economies this mode of economic cooperation may significantly speed up the process of South-South integration and the catch-up with developed economies in terms of the breadth and depth of regional economic integration. And while the progress in the mega-regional track of trade liberalization could well be slow due to coordination issues and the current protectionist trends, it also remains one of the most significant and largely untapped reserves for trade liberalization and economic cooperation.
[1] https://www.mercosur.int/mercosur-y-efta-celebraron-en-buenos-aires-la-xii-ronda-de-negociaciones/
Yaroslav Lissovolik, Founder, BRICS+ Analytics
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