Question

Answer each of the following questions on the promise and peril of economic integration.

Note: Originally, in 2001, this group of emerging economies was known as BRIC when it consisted of only four nations: Brazil, Russia, India, and China. In 2010 South Africa was inducted, changing the acronym to BRICS.

1. In recent years the EU has experienced both growth and turmoil, especially with the exit of Great Britain (expected to be completed before 2020). What pressures do you think the EU is facing and will be facing in the next few years?

2. What sort of competition will the EU face with other trading blocs like the Eurasian Economic Community (EurAsEC) and the Southem African Development Community (SADC)?

Answer 1

1. European Union comprises of 28 European countries. These countries act as one economic unit in the world economy. The European Union was founded after World War II. It was developed to foster economic cooperation in hopes of obtaining peace in a devastated continent and what it has resulted in, is a single European market. This single market allows people and goods to flow freely from one member country to another member country. The exit of Great Britain (Brexit) from European Union has created turmoil not only for European Union but for Britain as well. There are various issues that European Union is facing following the referendum such as the value of the pound decreased and is worth 10% less than the American dollar and inflation stands at 3.9%. Some of the biggest concerns of the Brexit are EU citizens residing in the UK. Only EU citizens that have been residing in the UK for 5 years or more will be able to apply for settled status and even then, permanent citizenship is not guaranteed. EU citizens working in the UK are fearful for their jobs and that there may be mass deportations. Some EU workers came to the UK due to lack of economic opportunities in their home countries and if they are sent back home their nations are looking at mass unemployment and a welfare crisis. Another important issue is security and Islamist radicalization within individual EU countries. Although the total number of people killed by successive terrorist attacks in Europe remains relatively low, also in historical comparison, public concern remains very high, driving also important measures to remedy deficiencies in counter-terrorist cooperation among European countries. The pressure of external events and threats has forced EU countries to try to find a common solution, in the knowledge that the member states on their own are too small to master them. Issues such as refugee and migration crisis, the terrorist threats, as well as the digital challenges, need to be solved. All these issues are putting great pressure on European Union. Finding a solution for all these issues is of prime importance for EU at present.

2) Globalization has forced the integration of emerging and developing markets into the global economy and increased the flow of goods and human capital through trade and investment. The benefits and costs of integration to both developed and developing countries have become clear in recent decades. The global market, with the help of new technologies and proactive financial institutions, is expanding to include new groups of people each day. Eurasian Economic Community (EurAsEC) is a relatively new entity that appeared in the post-Soviet region, which tries to join the neighboring countries into a strong and structured union. The Southern African Development Community and the Eurasian Economic Community are the trading blocs which are providing competiton to EU. These trading blocs are working for the development of their member countries so that these countries do not have to rely on European Union for their progress. They are focusing on increasing trade between member countries, formation of a single customs tariff and a single set of non tariff regulation measures, developing banking services and all other modern day services which are required for a nation to move towards development. In the field of trade EU has to face competition from SADC. The EU signed an Economic Partnership Agreement (EPA) on 10 June 2016 with the SADC EPA Group to avoid these problems. The EU is the Southern African Development Community EPA Group's largest trading partner, with South Africa accounting for the largest part of EU imports to and EU exports from the region. Also, EU exports a wide range of goods to the Southern African Development Community EPA countries, including vehicles, machinery, electrical equipment, pharmaceuticals and processed food. So, in order to avoid competition from these new trading blocs EU is entering into favourable agreements with these blocs.