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International School of Luxembourg

International Forum 2010 “Searching for a Culture of Peace”

Essay topic To what extent do Regional Trade Agreements help bring about a “Culture of Peace”?

International School of Luxembourg: Cuong Kasperzyk Felipe Amaral Joachim Refsdal Katie Dobbins Misa D’Angelo

International School of Luxembourg Peace, even though a concept widely used around the world, has been regarded my many as intangible and idealistic. We thus chose to take a more specific view, defining Peace as “An agreement or treaty between antagonistic nations, groups, etc., to end hostilities: e.g. the Peace of Ryswick.” By retaining this definition, we strongly believe that if agreements can be reached in times of hostility, there will be Peace. Nonetheless, we also understand that everything must be built on a foundation. Before taking on the grand task of bringing peace to the world, we must start by eradicating conflicts in smaller regions. For this reason, Regional Trade Agreements (RTAs) deserves a crucial role in building a Culture of Peace. “RTAs” is a broad term that covers the definitions of both free/preferential trade agreements and a custom union. RTAs are any trade agreement concluded between countries of the same geographical region that sets up common tariffs, non-tariffs barriers and sometimes socialpolitical policies. Some examples of prominent RTAs can be the EU1, NAFTA2, MERCOSUR3, and ASEAN4. There has always been the controversial debate on RTAs between those who believe that regional integration is an obvious stepping stone towards greater interdependence, trade liberalization and stability, and those who argues that RTAs do not seem to be a reliable solution for emerging conflicts. Thus in this essay we will address both points of view and attempt to come up with a resolution for this debate. “Peace is a natural effect of commerce”5 is a statement that advocates of RTAs would most likely agree with. In other words, it is commonly agreed upon that economics integration makes conflicts more costly for individual states. Any country involved in trade, no matter big or small, gains benefits from more efficiently allocated resources, expanded markets and greater economic diversification. Thus by attacking a trade partner, the country is undermining his own economy. Due to the fact that resources are not equally distributed among different nations, countries around the world can also use trade to access, instead of force to capture, each others’ resources. Besides the benefits from actively trading, there are also many advantages that arise from the act of joining RTAs itself. Firstly, countries can join other like-minded partners to counterbalance the negotiating power of other blocs. For example, the formation of blocs such as ASEAN and MERCOSUR was used to counter the negotiating power of the US while it sought to expand NAFTA to FTAA6. Secondly, closer integration is encouraged between countries that already had a common language and culture. 1

European Union North American Free Trade Agreement 3 Southern Common Market 4 Association of Southeast Asian Nations 5 Montesquieu - French philosopher, 1748 6 Free Trade Areas for Americas 2

International School of Luxembourg An example could be the CIS7, which has successfully brought together countries of different development levels after the collapse of the Soviet Union. Thirdly, countries that are economically weaker will receive support from wealthier countries, for having stronger trade partners is of everyone’s interest. Between 2004 and 2006, a $40 billion subsidy8 was granted to Eastern European countries by the EU in order to help stabilize their economies. On the other hand, many might argue that RTAs did not prove to be a reliable tool to prevent conflicts. There have been instances when members within RTAs could not maintain peace, such as various border clashes between Armenia and Azerbaijan (members of CIS), war in the Great Lakes region of Africa between Angola, Namibia, Rwanda, Uganda and Zimbabwe (all members of COMESA) and the Iraqi invasion of Kuwait (members of the Council of Arab Economic Unity). Even when war is costly and the option of a negotiated bargain exists, rival states can nevertheless go to war, propelled by incentives to misrepresent or keep information private, commitment problems after a settlement, or indivisibility of issues. It is also worth to mention the possible disadvantages of RTAs. Joining RTAs can be a painful adjustment at first as infant industries are most vulnerable against the lowering of tariffs and barriers and thus there is a threat of short-term unemployment and industrial contraction. Some agreements might lack means of redistributing income between member countries thus the gap in wealth might be widened. Finally, the reduction border controls and custom formalities might well lead to the increase in illegal trade of conflict resources such as blood diamond and illegal timbers. A conclusion we can derive from this debate is that, even though RTAs in general have the possibility to bring about Peace, there is still much room for improvement in their design – and that such improvement can be found simply by looking at the most successful designs of existing RTAs such as the EU, MERCOSUR and ECOWAS9. The features that make the EU stand out from other RTAs are its mechanism of redistributing income and good governance. Following the fall of the Iron Curtain, the EU concluded bilateral trade agreements with the Eastern European countries that helped reduce the wealth disparity and prepared them for eventual inclusion as new member states. Moreover, the model of Good Governance is exemplified by the Lisbon Treaty, which obliges all member states to promote peace, to create an area of freedom and to contribute to the protection of human rights. MERCOSUR, on the other hand, provides a special common 7

Common Wealth of Independent States The EU - What's in It for Me? Luxembourg: European Communities, 2007. Print 9 The Economic Community of West Africa States 8

International School of Luxembourg platform to discuss security issues. This platform has helped to reduce tensions between Argentina and Brazil, averted a possible coup in Paraguay and eased the issue of drug trafficking. Finally, ECOWAS established the world’s first regional moratorium of small arms, which bans imports of weapon without member states’ approval. This moratorium has partly solved the problem of illegal cross-border trade. In conclusion, it is true that poorly designed RTAs might lead to widening inequalities, trade diversion, trade exclusion, and possibly even trade isolation for countries which have no “obvious club” to join such as Taliban Afghanistan, Myanmar or Belarus. On the contrary, well designed RTAs will help create economics incentives for peace, develop non-military means of resolving disputes and bind countries’ interest of a shared peaceful future. Statistics have shown that RTAs are a trend of growing popularity – in 7 years from 1998 to 2005, the number of RTAs has risen from 102 to 250 and almost every country in the world is member of at least one RTA. If this rise in quantity is accompanied by a rise quality, that is, every RTAs having a realistic mechanism of redistributing income, accompanied by justly regional moratorium and good governance, we will have taken a long step towards achieving a Culture of Peace.

International School of Luxembourg

List of Abbreviations: ASEAN

Association of Southeast Asian Nations


Common Wealth of Independent States


Economic Community of West Africa States


European Union


Free Trade Agreement of the Americas


General Agreement on Tariffs and Trade

MERCOSUR Southern Common Market NAFTA

North American Free Trade Agreement


Regional Trade Agreement


World Trade Organization

Bibliography 1. Voronkov, L., “Regional Co-operation: Conflict Prevention and Security through Interdependence”, The International Journal for Peace Studies, 1998. 2. Brown, O. “EU Trade Policy and Conflict” IISD, 2005 3. Crawford, J. and Fiorentino, R., “The Changing Landscape of Regional Trade Agreements”, Discussion Paper 8, 2005, World Trade Organization, Geneva. 4. The EU - What's in It for Me? Luxembourg: European Communities, 2007. Print 5. Brown, Oli, Faisal Haq Shaheen, Shaheen Rafi Khan, and Moeed Yusuf. "Regional Trade Agreements: Promoting Conflict or Building Peace?" IISD - International Institute of Sustainable Development. Oct. 2005. Web. Nov. 2010.

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