The Variable Geometry Approach to International Economic Integration

Abstract Negotiations among nations on policies to promote international economic integration have widened in recent years to cover new issues; for example, foreign direct investment rules, policies to promote competition, the international movement of labor, the environment and monetary union. In these negotiations, a consensus among the parties negotiating is usually lacking and many of these negotiations have stalled. Variable geometry has emerged as a possible strategy to accommodate differences in views among nations. Variable geometry may apply to either a regional agreement or a multilateral agreement. The term first appeared in documents and treaties of the European Union but it has arisen in other negotiations, particularly in the WTO where it is being discussed as a possible method of breaking through the impasse in the recent failed negotiations of the Doha Development Round of the World Trade Organization (WTO). There are other negotiating strategies which are designed to introduce flexibility in many-country negotiations in other ways. Bhagwati (1991, p. 77 and 1993, p. 45) proposed the idea of “open clubs” as a strategy for negotiating regional trade (or integration) agreements. The idea in this context is that a group of countries negotiating a regional agreement, agree as a part of these negotiations to accept subsequently any other country which wants to join the group on the same terms. This is a strategy suited to a larger group of countries among which a subset is initially willing to enter an agreement. Like variable geometry within a fixed group, it is an opt-in provision. It is variable geometry with respect to membership of the group and all of the commitments and obligations which its members have agreed to.