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The concept Regional Integration, used as an instrument to aid international conflict

resolution and the easing of political tensions, predates even Kants 1795 publication of Perpetual

Peace. Broadly speaking, Regional Integration can be desirable in order to resolve security tensions

between neighbouring nations, to strengthen domestic Political Institutions (commonly to enforce

democratic rule) and also to ease political and social pressures such migration.

The formation of the EU results from the creation of the European Coal and Steel

Community between 6 nations (including Germany and France), first proposed by Robert Schuman

in 1948 as a solution to tensions that allowed Germany to re-build its coal industry with-out having

too much control over the French industry. Schumans aim was to make war not only unthinkable,

but materially impossible.

Regional integration, and more specifically the use of trade agreements, has long been used

in promoting peace. US Secretary of State Cordell Hull claimed, in reference to WW1, that war did

not break out between the United States and any country with which we had been able to negotiate

a trade agreement. Polachek (1992, 1996) showed that on average a 6% raise in trade resulted in a

drop of about 1% on his measure of conflict. One theory for this is the increase in trade between two

countries increases the stake which one holds with-in the others welfare, there-by increasing the

cost of war. There will also be an increase in domestic political pressure as more individuals with-in

that country have economic interests in the other, making Governments more likely to pursue other

means of conflict resolution.

Increase in trade also is likely to increase interaction on a governmental and individual level,

which in turn is likely to increase awareness of cultural, social and political differences and systems

which are all prone to result in an increase in trust and relations between the nations. Finally, the

threat of trade embargo is reduced as one country gains access to its partners strategic raw

materials, reducing the nations hostility regarding access to these supplies (e.g. the U.S. and oil

supplies). An additional benefit to the fall in disputes is the concept of a peace premium, where the

greater trust results in reduced spending on domestic defence budgets.

A trade bloc, especially those which include large developed democracies, can also be of use

in strengthening political institutions and in upholding or introducing a democratic system. In April

1996, Mercosur (a union between Argentina, Brazil, Paraguay and Uruguay) reacted to the rumour

that Paraguays armed forces commander was planning a military coup by releasing a joint

statement requiring a pre-requisite of democracy for all member nations. Member conditions

relating to democracy and human rights can only be effective if there is a credible and effective

penal system for defaulting nations. The larger the member nations benefits from being in the bloc,

the less likely they are to break the rules and risk losing the membership. The likelihood of penalties

imposed also increases if breaking the rule incurs a large cost to other member nations economicallyor indirectly such as politically (e.g. strikes, loss of domestic votes).

It is possible that trade blocs may help reduce political and social pressures. The US hoped

that by forming NAFTA which gave Mexico access to its markets, Mexican economic welfare would

increase, hopefully reducing the occasional unrest and violance the US were worried would spread

its way. Standard trade theory argues that trade and migration are substitues, therefore, larger

nations will seek to use trade blocs to reduce migrationary inflows.

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However, more recent studies show migration and trade as complements, especially in regards to

unskilled labour. Evidence suggests that since the introduction of NAFTA unskilled workers in

Mexicos real income has decreased by between 10-15%. As the wage inbalance increases, the

incentives for unskilled workers to migrate therefore increase. The increased welfare resultion from

the additional trade from regional integration may allow workers to overcome the cost barrier to

migration. Economic and other costs of migration also decrease as information about the destinationcountry become more readily available. According to these more recent analyses larger countries

may find trade blocs increasing the political pressures that they aim to reduce.

In the earlier EU example Regional Integration was shown as an effective way to maintain

peace. However, in some cases it has been shown to have the opposite effect. Trade blocs can

create an income transfer from one nation or region to another and industries can concentrate in

one location which can result in unrest from the nation or region losing the trade or welfare. The

main issue of the American civil war, as well as the abolition of slavery, was that of the tariff of

abominations which increased US import tariffs on manufactured goods resulting in a flow of

income from the South to the North as the Northern manufacturers increased the prices they

charged to the South. The Uganda -Tanzania war was in part, aggravated by their earlier complaintsover what they saw as unfair income flows into Kenya and the threat of localisation of

manufacturing in Nairobi which they couldnt compete with. These examples show that Regional

Integration can in fact have an antagonistic effect on international relations.

Sovereignty refers to exclusive right to exercise supreme authority over a geographic region

or group of people, such as a nation or a tribe, usually exercised by a government or sometimes an

individual. A common fear of regional integration is the loss of sovereignty as economic, political and

social decisions are taken within the bloc externally to the nation itself. In the case of the EU the de

facto capital is Brussels, while within law the decisions of the EU court of law are binding on all UK

courts.