Regional Integration in African, Caribbean and Pacific countries 1 A review of the literature September 2008 1 This study is supported by the European Commission, DG Development, and is led by Dr Dirk Willem te Velde (
[email protected]) and includes Dr Mareike Meyn; they are grateful to Gabriel Boc for assistance. The views expressed are those of the authors alone and do not reflect the views of the European Commission or ODI. 1 EXECUTIVE SUMMARY Introduction This review of regional integration in African, Caribbean and Pacific (ACP) countries takes a broad view of regional integration and includes various aspects of regional trade integration such as tariff reduction and covers behind the border dimensions of regional trade integration such as cooperation and harmonisation in standards, services and investment, etc. but also regional policy cooperation in areas such as. infrastructure, agriculture, economic co-operation and political integration. We discuss regional trade integration, both expected effects and the empirical evidence of regional integration in the ACP and where appropriate elsewhere. We do not argue that multilateral trade liberalisation is not better than regional trade liberalisation; however, we argue that there can be significant benefits from regional integration although there can be costs as well. The benefits of regional tariff liberalisation and behind the border dimensions of regional integration can be read as the costs of non-integration for the ACP. Without closer policy cooperation (in areas ranging from political, economic, social and cultural co-ordination) the ACP remain excluded from the gains of regional integration observed in other developing countries and discussed throughout this report.