Goodbye Economic Blocs and Welcome Nationalism

One of the structural adjustments that resulted from the globalization of the market was the establishment of regional economic trade blocs designed to expand the consumer market, strengthen business capabilities and reduce the production costs of international businesses.  New complex supply chains emerged among trade bloc members, as well as new nation-to-nation partnerships that, overtime, increased their interdependence, while at the same time reducing the power, autonomy, and maneuverability of individual nation states within the bloc.  Today, the global market is divided into trade blocs, with the exception of China.[1]  These regional economic trade blocs became the core of the global market system, particularly the most robust blocs, the European Union (EU) and the North American Free Trade Agreement (NAFTA).[2]  Nevertheless, under the new dynamics imposed by COVID-19, the regional economic trade blocs have lost their validity as the crisis has forced the member nations to recoil back into their rigid borders of the 1980s. 

It is feasible to say that the regional economic trade blocs have failed to maintain their cohesiveness, showing the world that they are fragile economic, political, social, and environmental structures unable to overcome the first real test of globalization.  Designed for the acceleration and expansion of commerce, but not for collective collaboration in times of crisis, NAFTA, the EU, and all the others have been sidelined.  Member nation states have instead closed their border and shut down supply chains as global consumption comes to a standstill.

Essential trade, mostly in trucks, continues to move freely among regional economic trade blocs, but at significantly lower levels, simply because people are not moving between borders and consuming goods and services at the pre COVID-19 rate.  Meanwhile, essential and urgent medical equipment and personnel, were hoarded and secured for national interests, contradicting the nature of the economic bloc.  The idea of one collective market is now questionable.

The European Union’s reaction to the crisis revealed the inequalities and disadvantages that exist within Europe.  Germany and France quickly shut their doors on Italy and Spain, watching from a far as people began to die in these two affected markets.  The EU’s reaction came a month later through its institutions and the European Central Bank, but it was a month too late.[3] The financial and logistical support has been less than acceptable, forcing markets like Italy and Spain to depend on aid from China, Russia and Cuba, instead of receiving the support from the other union members.

The NAFTA trade partnership has also revealed its weaknesses, as the U.S., Canada, and Mexico closed their borders, shutting the door on the opportunity to cooperate and coordinate a collective effort in order to combat COVID-19.  Ignoring the fact that our supply chains are heavily interconnected, that our food production system are heavily interdependent, and that our economies are intimately integrated, the three markets opted to strategize independently, putting at risk the long-term sustainability of the trilateral partnership.  The trade bloc that survived the attacks of the Trump administration now seems fragile and almost irrelevant as the three economies slow down, and their markets turn to nationalist solutions. 

It is now questionable whether the EU, NAFTA, and the other trade blocs will be able to regain momentum once their member nations overcome the challenges of COVID-19 and begin to rebuild their economies.  It is clear that each market will have to be rebuilt from the bottom up and not via the global market system, bring back from the dead the spirit of nationalism.  If that is the case, then there will be pushback against globalization and particularly the structural bureaucracies of the economic blocs that have bled the national coffers of most member countries.

Spaniards and Italians have lost their confidence on a European Union that turned its back against them.  Not much has been said about the NAFTA members, but the popular sentiment is that the local economy will have priority over the global economy.  Nevertheless, the interconnectivity of the past thirty plus years will make it very difficult for some nations to quickly get back on their feet.

How will the EU sell the idea to the public that Germany and France need to be rebuilt first in order to lift the other members?  How will NAFTA sell the idea that the US economy will need to recover first in order to lift the Canadian and the Mexican economy?  The future survival of economic blocs is less feasible considering the potential devastation of the economies of the member nations. 

Either regional economic trade blocs adopt social, environmental, and health policies that look after the collective well-being of its citizens or they will collapse.  Citizens of the member nations will hold them accountable after this crisis, and if they do not change their corporate driven focus, they will succumb.  This inevitable confrontation that will follow the post COVID-19 era will perhaps mark the end of economic blocs and the return of nationalism.

The pillars of the global economic trade blocs are now fractured, and as the impacts of COVID-19 spread globally, the damage might be too large to repair.  So large, in fact, that some counties within the EU might abandon the union.  Separatist movements fueled by nationalism may once again surface, and inequalities and disparities within the reconstruction period may even perhaps result in social unrest and political instability.  This may also be the case among the NAFTA members, as the regional pockets of disparity and disenfranchisement are unveiled by the devastating economic damage of COVID-19.

The advocates of globalization therefore have a big task ahead of them, while the nationalist see in COVID-19 an opportunity to regain lost ground.  This will be reflected in future local and national elections, in the public-private strategies put in place in order to rebuild economies, and in the popular sentiment of local and national constituents.  Will the masses in Europe continue to back the idea of a unified Europe?  Will Americans, Mexicans, and Canadians be willing to outsource their jobs one more time? Will the capitalist leaders continue to advance their self-interest over national interests? Will consumers be willing to pay more to support their national economies?  Will the world of “Made in China” come to an end?  Like it is currently said across media sources; humanity is navigating “unchartered waters.”


[1] This includes the European Union (EU), the European Free Trade Association (EFTA), the Caribbean Community (CARICOM), the African Union (AU), the Pacific Alliance, Eurasian Economic Union (EAEU), the Arab League (AL), the Association of Southeast Asian Nations (ASEAN), the Central European Free Trade Agreement (CEFTA), the North American Free Trade Agreement (NAFTA), and the South Asian Association for Regional Cooperation (SAARC)

[2] After renegotiations during the past few years, NAFTA is referred to as the United States-Mexico-Canada Agreement (USMCA), NAFTA 2.0 or the New NAFTA.

[3] Steven Erlanger, “Europe Fumbles Coronavirus at First: Can it Manage the Pandemic Now?”, The New York Times, March 26, 2020. Accessed March 29, 2020.

Stefano Tijerina

About Stefano Tijerina

My name is Stefano Tijerina and this blog’s objective is to connect Maine’s social, environmental, economic, cultural, and political issues to the global system, centering on how the local impacts the global and how the global impacts the local or what is known in Global Studies as the "Glocal" effect. In our present era of globalization it is crucial for the general public to understand how the new dynamics of the international system impact our lives here in Maine and how our local decisions impact the earth. These are my personal views, and they do not express those of the University of Maine System or the University of Maine.